A number of European financial regulators welcomed opinions published by the European Securities and Markets Authority on sector-specific principles regarding relocations to the remaining 27 European Union member states from the U.K.
And Rhodri Preece, head of capital markets policy for Europe, Middle East and Africa, at the CFA Institute in London, said the organization hopes to see a sensible approach by regulators.
One area Mr. Preece highlighted relates to the assessment of reasons for investment management delegation.
"The (ESMA) opinions also stress that the delegating or outsourcing must be based on objective analysis — and there are often very good, objective reasons to delegate or outsource certain functions," Mr. Preece said. The management of a segregated contract with exposure to a specific country may be outsourced to an entity in the relevant country, for example in the case of a European pension fund hiring a U.S. money manager to run the U.S. portion of its portfolio. "Delegation or outsourcing can therefore be in the client's best interests — we hope that regulators take a sensible approach to the application of these opinions in their respective markets and do not seek to overly restrict such beneficial arrangements," he said.
France's financial regulator — the Autorite des Marches Financiers — in a comment provided by a spokeswoman said it supports in particular "the balance found by ESMA between reaffirming the possibility for managers to delegate their activities and putting a limit to this possibility with the aim of avoiding letterbox entities," said the AMF. "For the AMF, delegation is key for EU-based asset manager companies to optimize their organization and have access to a wide range of expertise. But we are vigilant EU entities willing to delegate will have sufficient means to control all investments that are delegated."
A spokesman for the German regulator Bundesanstalt für Finanzdienstleistungsaufsicht said in an emailed comment that BaFin will "maintain our administrative and supervisory practice in the investment management sector which is based on the detailed" frameworks set out in UCITS and AIFMD, "and we do not see a conflict with the principles set out in the sector-specific ESMA opinion."
A spokesman for Luxembourg regulator Commission de Surveillance du Secteur Financier referred to a statement on its website, which said: "The CSSF supports the efforts undertaken by ESMA to avoid regulatory arbitrage and the establishment of letterbox entities. The principles laid down by ESMA in those three opinions are in line with the CSSF's practice."