As the dust is finally settling on last Thursday's historic result, with the aftermath sending shockwaves across the political, economic and regulatory spectrum, what does this all mean for the UK's asset management industry? One word: uncertainty.
While David Cameron suggested the UK would begin invoking Article 50 of the Lisbon Treaty in the autumn, European Commission president Jean-Claude Junker is expecting the UK's farewell letter on his desk "immediately". There is uncertainty remaining over which one of the three principal exit models will be selected by the UK, which it appears will not be determined until the Conservative leadership contest is contended in the autumn. Will the eventual winner look to negotiate with the EU to remain a member of the EEA (for the reason that it would negate the referendum result by conditioning UK membership on compliance with certain EU legislation in a similar manner to Norway)? Most agree this seems unlikely, but from now until the leadership contest is concluded and the outcome is known, this period of uncertainty will have an enormous impact on UK-based firms and investment funds.
Still to Come: Impact on EU Fund Regulations
The more significant EU-based regulatory regimes impacting the UK asset management industry are:
Undertaking for Collective Investment in Transferable Securities Directive (UCITS), the Alternative Investment Fund Directive (AIFMD) and Market in Financial Instruments Directive (MiFID). UK-based firms and investment funds utilizing the aforementioned regulatory regimes for passporting/marketing throughout Europe now need to consider the short, medium and long-term impact to their business of last Thursday's result.
Ireland and Luxembourg – Choice, Opportunity and Certainty
Amongst the myriad of uncertainty is one definite – Ireland and Luxembourg continue to be key domiciles of choice for both investors and managers. With their significant standing within the EU, proximity to the UK, favourable taxation regime and treaties and a comprehensive legal and regulatory landscape, Ireland and Luxembourg are well positioned to assist managers and investors during this tumultuous time.
DMS is one of the largest independent AIFM and UCITS Management Companies, approved and supervised by the Central Bank of Ireland. DMS, as Europe's leading AIFMD and UCITS Management Company, has assisted some of the largest asset managers and investment funds in successfully understanding and navigating the European legal and regulatory landscape to gain access to European investors and their capital. The strong synthesis between our people, market leading technology and independent risk management offering allows DMS to provide solutions in key areas such as investment management, fund risk management, operational risk management, regulatory compliance, distribution, capital and financial management.
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