The Alternative Investment Management Association (AIMA), the global representative of alternative asset managers, has published a position paper entitled ‘Brexit and Alternative Asset Managers: Managing the Impact’.
The paper offers a detailed assessment of what will need to be addressed during the transition period that has recently been agreed between the UK and the EU. AIMA believes that addressing these points will minimise disruption for UK fund managers and EU investors when the UK leaves the EU.
The analysis is based on the assumption that the UK will leave the EU’s single market and that many existing cross-border provisions in EU legislation will cease to apply for UK firms.
It builds on a 2016 paper, ‘Brexit and Beyond’, jointly published by AIMA and the US-based Managed Funds Association, which recommended an overarching financial services agreement between the UK and the EU based on the principles of equivalence, reciprocity and non-discrimination.
AIMA CEO Jack Inglis said: “We are encouraged by the recent agreement between the UK and EU regarding a transition period. This gives clarity to firms about the forward timelines associated with Brexit. The important thing now is to work out what will need to be addressed during that transition period and that’s the goal of our latest paper.”
The paper does not speculate on the final shape of a Brexit settlement but instead sets out a series of technical points that need to be addressed during the transition period to smooth the journey for firms as they revise their approaches to reflect the UK’s new “third-country” status.
The paper calls on the UK to establish cooperation agreements with regulators across the EU. It recommends that the UK seek a Brexit deal that incorporates an “equivalence” determination in respect of UK rules by the European Commission. Such a ruling would enable UK firms or clearing or trading infrastructure providers to continue to provide services to EU clients.
The paper also encourages the UK to seek a deal with the EU that ensures that UK firms’ relationships with EU investors and clients can continue uninterrupted by virtue of “grandfathering” provisions.
AIMA CEO Jack Inglis added: “This is a time of uncertainty for the UK’s alternative investment management industry, and our members continue to devise and implement a variety of contingency plans. With this paper, we hope to set out the clear steps that policymakers and regulators need to take to smooth the path to the new regime and prevent disruption to the UK industry and the clients and investors that it serves in the EU. Our next piece of work in this area will be a similar paper considering these issues from the point of view of European policymakers and managers.”
The paper is sponsored by Simmons & Simmons, the law firm.
Simmons & Simmons partner Devarshi Saksen said: “We are delighted to support AIMA in its objective of seeking to identify the areas of uncertainty that Brexit is likely to present to UK alternative investment managers. We have drawn upon our wide experience on Brexit related projects to provide input to help firms assess likely areas of disruption and where they need to, and can, address those, given the current state of play.”