European Securities and Markets Authority gives a preview of how British hedge funds and private credit assets could tap EU’s single market bloc after Brexit.
Before Brexit negotiations begins, a British hedge fund group has laid out its wishlist, which includes continued access to EU’s single block market along with continued access to its workforce.
The wishlist comes midst the British government going ahead with its divorce with the EU which have made the country’s industry nervous since this could end Britain’s “passporting rights” through which it sells its services across the European Union.
“The UK industry should continue to be able to access investors and provide investment management services to clients in the EU following Brexit,” said the Alternative Investment Management Association (AIMA), a global hedge fund industry association.
After the June 23 referendum, AIMA had stated it was clearly in Britain’s interest to continue to have access to EU’s markets.
The industry group wants to involve itself heavily during Brexit negotiations.
“The UK industry should continue to be able to access skilled workers from the EU and beyond following Brexit,” said AIMA.
Significantly, 20% of the UK hedge fund industry workforce was comprised of non-UK European Economic Area nationals, said AIMA.
“The relationship between the UK and the EU for financial services should be based on an overarching international agreement based on equivalence and reciprocal non-discriminatory access”, said AIMA.
Appropriate transitional arrangements should be in place while this relationship is still being worked out, said the industry group.
Of note is the fact that in earlier this year in July, the European Securities and Markets Authority (ESMA) had stated that hedge funds from Hong Kong, Singapore, and the U.S. should be allowed to market themselves in the European Union.
ESMA’s recommendation to the European Commission, EU’s executive, is likely to be an endorsement of what Britain’s financial services is likely to face once it leaves the bloc.
AIMA stated that new securitization and UK funds should act as a vehicle and should be developed to keep hedge fund and private credit assets ‘onshore’.