GLASGOW, Scotland (Reuters) – The threat facing British fund managers of having to relocate to the European Union to manage EU investment funds after Brexit is receding, the head of the country’s Investment Association (IA) said on Monday.
“I am expecting other European financial centres to grow a little, a necessary part of the rebalancing after Brexit, but I think the UK remains the preeminent destination for portfolio management,” Chris Cummings, chief executive of the IA, told Reuters.
The industry could take “great comfort” from recent statements by the European Securities and Markets Authority (ESMA), which governs EU regulation on financial securities.
ESMA’s chair, Steven Maijoor, said last week that EU and UK regulators will sign cooperation agreements or memorandums of understanding to supervise cross-border financial activity, seen by the IA as aiding the continuation of delegation after Brexit.
Delegation refers to a fund listed in one country being run by a portfolio manager based in another, a system used by the sector worldwide, not just in Europe.
Asset managers based in Britain operate funds listed in Luxembourg and Dublin holding over a trillion euros of assets for customers across the bloc.
Fund managers are concerned that after Brexit they will no longer be able to manage funds listed in the EU under delegation.
“There were some mixed messages from last summer, but that now seems to have been clarified by ESMA, that portfolio management can continue,” Cummings said.
He said he was hoping for a political agreement between Britain and the EU in November, after which point ESMA could provide more detail for the industry, giving further confidence.
“Because of the new certainty that we have on delegation there is greater confidence that we won’t have to move those people into other member states.”
(Reporting by Elisabeth O’Leary; Editing by Huw Jones/Louise Heavens/Susan Fenton)