The delegation of management, an open breach in Brexit

Posted on Dec. 2020 at 11:08

If the showdown is already engaged on interest rate derivatives, another thorny subject could oppose Brussels and London in the outcome of Brexit: the delegation of management. A perfect example of the globalization of financial services, this mechanism makes it possible to manage, in a given country, investment products registered in a second country and sold locally… or on a third market.

Uncertainty over the future of delegated management is the biggest risk for UK asset management. At the end of 2019, 2.100 billion pounds (2.430 billion euros) were managed in the United Kingdom on behalf of European clients and 80% of these outstandings were housed in open-ended UCITS European-format funds mainly domiciled in Luxembourg and Ireland. , which allows their marketing on the continent, explains Marina Cremonese, senior analyst at Moody’s. If the delegation rules change, there could be a massive flight of capital. “

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