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How will the EU reshape fund managers’ regulations after Brexit?

FTfm Fund management

How will the EU reshape fund managers’ regulations after Brexit?

UK fund managers fear Brussels could shift goalposts and compromise third-country access

Siobhan Riding, 16 February 2020

 

Brexit has worked some City of London fund managers into a frenzy about the prospect of becoming free from the reams of EU financial regulations that have been imposed on them since the financial crisis.

…Any move to toughen up existing rules or roll back third-country access would have big implications for UK managers with EU customers, as it would make it harder for them to keep pace with regulations and potentially compromise their access to European investors…

FTfm examines the possible regulatory skirmishes affecting UK asset managers.

Delegation

…The fact that about £1.7tn of European investors’ assets are managed on a delegated basis from the UK — now a third country that is not subject to EU oversight — is prompting some policymakers to echo France’s calls for a more robust system…

Passporting

UK fund managers received an early preview of how politics can interfere with regulation when the European Commission shelved plans to grant market access to 12 non-EU countries in 2017…

Although Esma has partially assuaged cross-border managers’ concerns by confirming that non-EU groups can access the bloc without establishing a local branch, the regulator recently proposed tough new hurdles in terms of equivalence standards and reporting obligations for groups from outside of the bloc.

Research payments

Few City fund managers would be sad to see the back of Mifid II, which was a mammoth task to comply with when it came into force two years ago.

But one element of Mifid II seems sure to remain on the UK’s rule books. The UK was the main architect of the requirement for fund managers to split the cost of investment research from that of buying and selling securities, and the Financial Conduct Authority has vigorously defended the regime since it came into force, despite backlash from the industry.

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