EU watchdog flags harder line on cross-border funds management By Reuters

EU watchdog flags harder line on cross-border funds management By


© Reuters. FILE PHOTO: EU’s anti-fraud package presentation in Brussels

By Huw Jones

LONDON (Reuters) – Brexit safeguards to stop asset managers in Britain running “shell” investment funds in the European Union to retain access to its markets should be hardwired into EU law, the bloc’s securities watchdog said on Wednesday.

After Britain voted in 2016 to leave the EU, the European Securities and Markets Authority (ESMA) issued guidance on minimum “substance” or senior boots on the ground at EU funds typically domiciled in Dublin and Luxembourg and whose portfolio management has been “delegated” to London.

“Moreover, in light of the withdrawal of the UK from the EU, delegation of portfolio management functions to non-EU entities is likely going to further increase,” ESMA said in a letter to the bloc’s financial services chief Valdis Dombrovskis.

ESMA said there was merit in providing “clearer legal drafting” in the bloc’s laws on substance and delegation requirements in line with its earlier Brexit guidance.

The EU may want to back up the “qualitative” criteria on substance with clear quantitative criteria, or provide a list of core or critical functions that may not be delegated at alternative and mutual funds, ESMA said.

“Put simply, this is an attack on London,” said Jake Green, a financial regulatory partner at Ashurst law firm.

“It is also doubtful that Luxembourg and Ireland will be happy with this as it could materially impact their fund offerings,” Green said.

A pending review of EU alternative fund rules that cover hedge funds and private equity funds was an opportunity to consider “greater harmonisation” with regulations governing mutual funds known as UCITS, ESMA said.

Alternative funds must report exposures to real estate and corporate debt to enable authorities to assess if they have enough liquidity in a market crisis.

ESMA said it was “sub optimal” that it does not have access to similar data on UCITS without extensive ad hoc data requests that slow down analysis.

ESMA is already checking on liquidity at UCITS.

“This assessment should be based on the analysis of how funds have reacted since the onset of the COVID-19 pandemic and their current situation, and on an estimation of their resilience to a future shock,” ESMA said.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Source link

Leave a Reply

Your email address will not be published. Required fields are marked *


About us

InvestLab is a financial services technology company focused on the global trading market. Founded in 2010 in Hong Kong, the company develops trading, market data, and social research products that enable individual investors and small to mid-size brokers to access global markets. We provide brokers and financial institutions cross border capabilities for retail investors into 43 markets globally.


CONTACT US

CALL US ANYTIME