One of the biggest industry concerns since Britain’s exit from the EU is whether the UK will retain its Alternative Investment Fund Managers Directive passporting rights, as reported in sister publication, pfm.
So far, it is unclear what impact losing the passport would have on UK fund managers marketing to EU investors.
“On one hand, a loss of the UK’s passporting rights could encourage managers to move their European operations to other jurisdictions, which would benefit those locations,” Tim Thornton, chief operating officer of fund services at MUFG Investor Services, the global asset servicing arm of Mitsubishi UFJ Financial Group, said. “On the other hand, should a fund’s primary investor base be the UK, we could see those products re-domiciled to the UK and become unavailable to European investors.”
Until Brexit negotiations progress, it is unclear whether the UK will be allowed to retain its AIFMD passport or will be required to apply for a passport like other non-EU countries.
“Given that the regulatory regime in the UK already matches that of the EU, the process of bringing forward the approval of an AIFMD third country passport should be relatively straightforward,” said Thornton. “If the UK’s regulatory landscape substantially changes, we can expect the European Securities and Markets Authority to take a tougher line on passporting, pushing the UK further down the queue,” he added.