ADVANCED

Triggering Article 50 – Cordium’s viewpoint

Published on: Mar 28th, 2017

As the UK Government prepares to trigger Article 50, Cordium’s Stephen Burke reviews the situation.

We are now on the road to the Brexit and a bumpy one it will be.  Since the vote we have been urging clients to focus on building flexibility into their business models, but we hope that there will be no insurmountable Brexit problems, and possibly many new opportunities.

The UK Portfolio Management industry is bigger than the next three largest European centres, added together. It has been built up over many decades and has a depth of skills and knowledge. It is our view that it will not be leaving London any day soon. The biggest concern that most firms have is attracting and retaining talented people.  While UK and the EU27 both seem to be committed to doing the right thing it may be some time when this is settled.

Other concerns come down to distribution firms needing to create EU27 funds by setting up new structures in Luxembourg or Ireland or having an EU27 distribution capability (for existing funds).  We also hear that some investors based on the Continent are considering setting up in the UK to retain access to the best investments.

Of course there are many opportunities outside the EU and discussions are already underway to develop an additional legal framework to focus on the needs of non-EU customers.  The UK Hedge Fund industry overwhelmingly offers Cayman Islands funds so there is an opportunity to develop an additional non-EU AIFM framework.

Cordium has an EU27 AIFM solution available for managers with Irish or Luxembourg funds, and we are looking at how we best support distribution activity post Brexit.  We continue to advocate that clients retain as much flexibility as they can in their business to ensure they are optimally positioned post Brexit.