Consultation on changes to the AIF Code to transpose EU AIFMD II

1    Executive summary

1.1    Overview

1.1.1    Jersey’s financial services regime, while independent to the UK and EU systems, is still expected to monitor and plan for developments with a UK or EU element.

1.1.2    Through applicable legislation and our current AIF (‘Alternative Investment Fund’) Code, we operate a dual AIFM (‘Alternative Investment Fund Manager’) regime which complies with the EU AIFM Directive (‘AIFMD’) and the UK AIFM Regulations. This ensures Jersey’s equivalence and its resulting market access in the EU and UK through the Private Placement Rules.

1.1.3    The EU AIFMD was updated in April 2024 to take account of EU AIFMD II, which must be implemented by April 2026. UK authorities are currently consulting on proposed UK AIFM changes. The UK consultations closed in June, and draft rules implementing the UK AIFM proposals are due to be consulted on in H1 2026.

1.1.4    To maintain market access in the EU and the UK, Jersey must adapt its AIFM regime to reflect and align with both the EU AIFMD and the UK AIFM regime changes.

1.1.5    The EU and UK AIFM regimes are diverging, with the EU’s changes already finalised while the UK’s new approach remains under development.  Our AIF Code must now be split to reflect the (i) EU AIFMD II requirements by April 2026 (‘EU AIF Code’) and (ii) final agreed UK AIFM proposals (‘UK AIF Code’) in due course.

1.1.6    A working group of fund sector experts, led by the JFSC, reviewed AIFMD II to assess any necessary legislative or Code updates. They found that while the AIF Code will need changes to transpose the EU AIFMD II by April 2026, no changes are needed to the AIF Regulations, AIF Order or the FS(J)L, CIF or the FSB Code.

1.1.7    The working group has further concluded that the consequential amendments to the EU AIF Code to take account of EU AIFMD II should not materially impact Jersey as a third country.

1.1.8    In relation to the EU AIFMD II changes that impact the Private Placement Rules, including paragraphs 25 (AIF/AIFM) and 26 (Depositary) of the EU AIF Code (Articles 36 and 42 of the AIFMD), we have not transposed into the EU AIF Code the EU’s requirements in respect of third countries. However, industry should be aware of the EU lists of high-risk and non-co-operative jurisdiction changes in respect of third countries.

1.1.9    Updated paragraph 15 of the EU AIF Code (Depositary) has also been shared with Jersey Depositaries, with one respondent helpfully noting that the EU AIFMD II changes are in line with their existing work practice.

1.1.10    We invite your feedback on the proposed updates to the EU AIF Code. These changes reflect the requirements of EU AIFMD II and include other revisions based on the updated Level 2 EU AIFMD Regulation.

1.2    What is proposed and why?

1.2.1    We update the AIF Code on a routine basis to ensure that it remains current. Consequential changes to the EU AIF Code to take account of EU AIFMD II are required, effective from April 2026.

1.2.2    The updated EU AIF Code is designed to maintain our current market access in the EU through the Private Placement Rules and, to support business as usual.

1.3    Who would be affected?

1.3.1    The proposals in this consultation paper have the potential to affect our Jersey Funds industry who should be aware of the consequential amendments to the EU AIF Code to transpose EU AIFMD II.

Read our full consultation on changes to the AIF Code to transpose EU AIFMD II.