Norton Rose Fulbright highlight that the big issue for the UK asset management industry is the risk of changes to delegation rules that enable MIFID investment firms, alternative investment fund managers (AIFMs) and UCITS management firms to delegate to a UK-based investment manager.
Many UK-based fund managers already use Irish or Luxembourg UCITS and alternative investment fund (AIF) platforms for pan-European distribution. The effect of Brexit on the UK as a fund domicile might, therefore, be relatively limited, although there has been some evidence of asset managers seeking to rebalance their operations and build a greater presence in the EU where they did not already have this.
Norton Rose Fulbright helpfully provides an overview on investment management post Brexit.
For financial investors, Norton Rose Fulbright suggest that, for UK hedge funds and private equity companies, the key test is the “equivalence” of UK regulation compared with international standards, such as those set by the Financial Stability Board. Other financial institutions such as banks may face a more difficult hurdle with the key test being the equivalence of UK regulation with those in the EU.