The Gibraltar Financial Services Commission (the FSC) has signed a memorandum of understanding (MoU) with the Swiss Financial Markets Supervisory Authority (FINMA) which is available to view here.
The MoU is designed to be complementary to the IOSCO Multilateral Memorandum of Understanding to which both countries are also party, and relates to the consultation, co-operation and the exchange of information related to the supervision of Alternative Investment Fund Management entities (AIFM’s). The MoU complements but is not intended to alter the terms and conditions of the IOSCO MMoU which also covers information sharing in the context of enforcement investigations.
WHY IS THE MoU IMPORTANT FOR GIBRALTAR AND WHAT DOES IT MEAN IN PRACTICE?
The reason the MoU is important is that in Gibraltar, as in other European jurisdictions, where the AIFM intends to delegate either portfolio or risk management, the delegation can only be made to an undertaking which is authorised or registered for the purposes of asset management and subject to supervision, or prior approval by the FSC. This would allow a Gibraltar AIFM to delegate portfolio management to, for example, a UK MiFID investment firm. However, where the delegation is to a third country such as Switzerland, in addition to the delegate being ‘authorised or registered’ there must also be cooperation between the FSC and the supervisory authority of the undertaking (in this case FINMA). This cooperation is ensured through the MoU which has now been signed between the FSC and FINMA.
This allows the opportunity for a working solution to be provided to a Swiss manager seeking to gain a passport of his fund, and to be able to market to professional investors throughout the EU through a Gibraltar AIFM solution. In principle, an AIFM management company may be appointed and may now delegate certain portfolio management functions to a Swiss manager (subject to the approval of that manager). Although there are factors to be considered here, at a high level this is the European distribution solution that may now be offered from Gibraltar, providing a fully equivalent solution to that of other European countries.
The news for the Gibraltar industry remains positive and in this year’s Global Financial Centres Index (16th Edition) Gibraltar ranked higher than Cayman, Malta, the Isle of Man or Jersey as a Financial Centre. Gibraltar was also ranked as one of ten cities most likely to become significant in the next few years. The report is available to view here.