Gibraltar has taken an important step to enhance its investment services framework with the introduction of tied agent permissions for Alternative Investment Fund Managers (AIFMs). These amendments allow Gibraltar-authorised AIFMs with MiFID permissions to appoint tied agents. Until recently, this was an option that was only available to firms in Gibraltar authorised as MiFID managers and opens a vital incubator route for emerging managers.
A tied agent is an individual or entity that operates under the full responsibility and supervision of an authorised investment firm (the host firm) and acts on its behalf to offer certain investment and marketing services. This incubator-type model allows smaller or start-up managers to operate within a regulated framework, whilst leveraging the compliance, governance, and infrastructure of the authorised host firm.
Under MiFID regulations, investment firms have long been able to appoint tied agents to carry out certain investment activities under their regulatory umbrella. However, in 2013, when AIFMs were granted the ability to perform MiFID activities, the tied agent permissions were not extended to them. This created a regulatory inconsistency between AIFM and MiFID firms, despite them both being authorised to perform the same type of MiFID investment activities.
When the EU AIFMD regime was introduced for fund management in 2012/2013, quite a few Gibraltar investment firms surrendered their MIFID licence and obtained AIFM authorisation instead. As a result, very few MiFID firms remained in the jurisdiction and most did not apply a business model that could accommodate tied agents. The local market was effectively left without a practical incubator route for small or emerging managers to start their businesses.
The EU has since addressed this issue with AIFMD II, which was implemented in 2024 and allows EU AIFMs with MiFID permissions to appoint tied agents under the same conditions as EU MiFID managers. Due to Brexit however, Gibraltar will not be transposing AIFMD II, therefore the inconsistency would have persisted indefinitely without local legislative action. The new amendments to the AIFM regulations serve to correct this regulatory imbalance and bring Gibraltar’s regime in line with European standards.
Gibraltar is a small niche jurisdiction and as such, tends to attract emerging managers and start-up ventures. Becoming an authorised investment firm can be time consuming and resource intensive, making it a prohibitive option for smaller players. Many of these managers have strong investment expertise but lack the infrastructure, capital, or resources required to obtain full authorisation as an investment firm. The tied agent model offers them a practical and cost-effective route into the investment industry. It allows them to:
These benefits can become a key driver of innovation and competition in the Gibraltar investment management sector.
Local legislation gives tied agents a clearly defined scope of activity. A tied agent may promote investment services on behalf of the AIFM, provide investment advice and receive/transmit orders from clients. However, there are important limitations:
This structure ensures that regulatory responsibility remains firmly with the authorised AIFM, while still giving tied agents meaningful ability to engage with clients.
With the new amendments now in force, Gibraltar finally has a functional tied agent regime available to AIFMs and VFS is already positioned to offer hosting services to tied agents. This closes a long-standing regulatory gap and creates new opportunities for entrepreneurial managers, investment advisers, and niche investment boutiques looking to establish a presence in the jurisdiction.