The JFSC says there is now a period of up to six months for the European Commission to propose appropriate legislation, and for the European Parliament and Council of Ministers to agree to the third country 'passporting rules' becoming applicable to Jersey funds and their managers.

Mike Jones, Director of Policy at the JFSC commented:

“We are delighted with this further announcement from ESMA recommending Jersey be granted a ‘third country’ passport, which positively recognises the Island’s robust AIFMD framework and fully compliant regime which has been introduced.

Jersey is one of Europe’s leading centres for alternative funds business and the JFSC is committed to supporting the Industry by ensuring we have the right frameworks in place to ensure long term success.”

That view was echoed by Jersey Finance, who say that the Island will be one of only five non-EU jurisdictions to have no obstacles at all in being able to apply the passport.

Chief Executive, Geoff Cook added:

“The certainty of European market access that Jersey is offering to alternative fund managers is clearly having a positive impact on our alternative funds activity, both in terms of fund servicing levels and in growing the fund management community. Managers appreciate the flexibility Jersey offers in terms of accessing Europe through private placement or, in due course, the passport, as well as a regime for funds activity that is outside Europe.

“What ESMA’s latest announcement shows is that satisfying ESMA’s criteria is not straightforward for all jurisdictions and that Jersey’s foresight to create an AIFMD equivalent regime is now putting it in a very strong place.”

The decision was also welcomed by a specialist Funds lawyer at Ogier, Niamh Lalor:

“This news is not unexpected, but it’s still a very welcome endorsement, and gives welcome confidence at a time when the Brexit debate is still creating uncertainty in some other sectors of the wider economy.

“Once again, a leading international body has recognised the robust frameworks that have been put in place in the islands, which have become one of Europe’s leading centres for the alternative funds business.

“We look forward to the formal process of the granting of the ‘passport’ by the European Commission within six month deadline.”

The number of Jersey-based fund promoters has almost doubled over the past five years. At the end of June 2016, there were 134 Jersey-based fund managers, up 5% annually. In addition, reflecting the flexibility of Jersey’s funds regime, managers also continue to widely use the national private placement regime option available in Jersey, with more than 100 managers and 200 funds currently authorised by the Jersey Financial Services Commission (JFSC) to market into Europe under AIFMD.

The latest figures for Jersey’s investment funds sector show that ongoing growth in Jersey’s funds industry, which rose to £228.4bn in the first quarter of this year to the second highest level since 2008, is being driven by the alternative asset classes and strong performances in private equity (up 10% year-on-year) and real estate funds activity (up 20% year-on-year) in particular.