Credit: this story was first seen on: Portfolio Adviser
With Brexit just 2 months away, there have been many reports on the actions and considerations of fund managers across Europe; once the UK leaves the EU, how will their operations and portfolios be affected?
However, many European asset managers are already strategically positioned in case of a ‘no deal’ Brexit.
Back in March, when the UK was originally meant to exit the trading bloc, figures showed that “nearly 300 financial firms had moved or were planning to move some of their business, staff, assets or legal entities from the UK to the EU to prepare for Brexit”. As a consequence, a number of financial groups have already been reported to have relocated staff from the UK and set up new entities, most notably in Dublin and Luxembourg.
The UK is however hanging in there, due to the various contingency plans introduced by regulators, such as the memoranda of understanding (MoU) agreed between the European Securities and Markets Authority (ESMA) and European securities regulators, and the UK’s Financial Conduct Authority. “The MoU will allow certain activities, including fund manager outsourcing and delegation, to continue to be carried out by UK-based entities on behalf of counterparties based in the EEA.”
Some fund managers with London-based branches are opting to use the Temporary Permissions Regime (TPR) to allow them to continue operating in the UK for up to three years after Brexit. Meaning, that regardless of a deal or no deal, the fund managers can continue to sell its funds in the UK.
In spite of these options, “a number of fund managers have already moved billions of euros of EU investor assets from the UK to other territories to alleviae investor concerns.” It’s expected that this number increases as fund managers attempt to protect European investors.
Needless to say, there still remains many questions unanswered.