How non-EU managers can access Europe without being licensed under AIFMD

Andreas Wölfl, the former Head of Austrian Indices at the Vienna Stock Exchange, set up the Argentarius Group in 2004 by securitising an offshore hedge fund into a transferable security.

Argentarius is offering hedge funds, asset managers, family offices, managers of structured UCITS funds access to Malta’s new and robust Securitisation Act, which has made Malta a jurisdiction of excellence for securitisation transactions and the creation of exchange traded instruments (ETIs). The innovative cell companies in Malta’s Securitisation Act are protected against default & credit risk from both issuer & management company.  The combination of Malta’s Securitisation Act and Securitisation Cell Regulations makes Malta a unique legal framework that affords the highest level of investor protection.

Argentarius’ securitisation solutions are regulated by the ECB and therefore out of the scope of AIFMD. There is also no limitation on asset classes. This solution also stands out with an impressive speed to market (4-6 weeks until listing of ETI) and its low cost structure that is viable also for smaller issues (starting at EUR 5m).

As a listing agent for the European Wholesale Securities Market (EWSM) in Malta, Argentarius manages listings under both the Luxembourg and Malta securitisation acts with instruments that are traded on either the Deutsche Börse in Frankfurt (FWB) or the EWSM in Malta. With an exchange listed ETI, non-EU managers can access Europe without being licensed under AIFMD. But also AIFM-licensed managers set up ETIs with Argentarius to take advantage of the low cost structure versus a fund vehicles and the speed to market. As of May 2015, Argentarius has issued 50 ETIs with combined value of EUR 1bn.


Argentarius specialises in the securitisation of alternative investments into ETIs – Exchange Traded Instruments that are completely free of issuer risk and linked to and backed by an underlying asset or basket of assets— for hedge funds, asset managers, family offices, managers of structured UCITS funds and custodians for the fund industry.

An Exchange Traded Instrument (ETI) combines the advantages of mutual funds (the collateral by assets in a case of insolvency) with the flexibility in the design of a certificate (derivative security issued by a bank). ETIs are always feeders into the underlying assets and have no derivative or leverage embedded. An ETI is a “pass through” instrument that delivers the delta one performance of the underlying asset(s). New investment products can be launched quickly (4 weeks) whilst avoiding traditional high cost structures and maintaining tax neutrality.

A securitisation special purpose vehicle (SPV), As defined by the Act cannot be considered a collective investment scheme or be regulated by any other Act other than the Securitisation Act of Malta.Under the Act a securitisation special purpose vehicle can issue securities under the laws of any other jurisdiction enabling Argentarius to issue ETIs on global stock exchanges to suit our clients requirements.

NO CREDIT RISK
ETIs are issued by a securitisation special purpose vehicle (SPV) established under the Securitisation Act in Malta or Luxembourg which sets out the conditions which are imposed on the issuer and any service providers and offers full investor protection against the credit risk of both the issuer and the management company. ETIs issued on a stock exchange can be purchased by suitable investors through their broker relationships so the sales process is transparent and simple for all parties.

UNRESTRICTED CHOICE OF ASSET CLASSES
ETIs have no restrictions on asset classes; any alternative investments are eligible for a securitisation transaction. Non-EU hedge funds can also be securitizied for listing on an EU stock exchange. Any alternative asset class can be repackaged into an UCITS eligible asset. ETIs also allow to convert non bankable assets into transferable securities ready for deposit with a custodian. Argentarius also offers private label solutions for packaged retail investment products (PRIPs).

REGULATION
ETIs issued by a securitisation special purpose vehicle (SPV) under ECB regulation 24/2009/ECB are not AIFs and are regulated by the Securitisation Act in the country of the issuer (Malta or Luxembourg). ETIs listed on the European Wholesale Securities Market (EWSM) an EU regulated market are UCITS eligible assets issued with an approved prospectus suitable for a public offering within the EU.

ETIs issued on the open market at the Deutsche Börse in Frankfurt are suitable for promotion to professional investors as defined in Annexe II of MiFID. In certain cases an ETI issued on the Deutsche Börse can have an approved prospectus suitable for a public offering to retail investors within the EU.
[less]

Andreas Wölfl, the former Head of Austrian Indices at the Vienna Stock Exchange, set up the Argentarius Group in 2004 by securitising an offshore hedge fund into a transferable security.

Argentarius is offering hedge funds, asset managers, family offices, managers of structured UCITS funds access to Malta’s new and robust Securitisation Act, which has made Malta a jurisdiction of excellence for securitisation transactions and the creation of exchange traded instruments (ETIs). The innovative cell companies in Malta’s Securitisa ...more