Brexit – a decision to be respected, but one with extensive implications. An initial examination and analysis of the consequences for the financial market actors in the UK
The result of the referendum in Great Britain on staying in the EU came as a surprise. The implementation of this majority decision of the citizens now requires the withdrawal, or Brexit, to be formally declared and put into effect. The procedure for the withdrawal of member states of the European Union is specified in Article 50 of the Treaty of Lisbon. According to this, the UK government must officially inform the EU of its intentions in order to activate Article 50 of the Treaty of Lisbon. Following this, the EU and the country in question have two years to come to an agreement concerning the conditions under which withdrawal should be carried out.
This will be the first time for this procedure to be implemented and many areas of private and public life will undergo significant changes. Providing that the withdrawal from the EU is formally declared, Great Britain will become a ‘third country’ from the perspective of the EU member states.
Those products (e.g. investment funds, managed accounts) and service providers (e.g. asset managers, distribution platforms, banks and insurance) which are based in the UK currently benefit from the standardised, harmonised regulations of the EU, as well as unified standards for supervision and regulation and the resulting advantages of quick, low-cost distribution of products and cross-border services in other EU member states.
At present, financial market actors in the UK benefit from the tangible advantages of the so-called ‘EU passport’ for the distribution of UCITS funds or AIFs in EU member states, for carrying out the function of EU alternative investment fund manager and the possibilities of cross-border exchange of services.
Investors can be assured that harmonised restrictions apply across Europe, and that national regulations for the permitted purchase of a certain asset class relating to the EU member states also includes products for which the UK is the country of domicile (e.g. real estate, loans).
Following this two-year period and the completion of withdrawal from the EU, these rights will no longer apply to the UK. Many questions and uncertainties regarding Brexit currently preoccupy investors, financial market actors, lawyers and tax advisors, as well as representatives of EU member states, including:
- What form will bilateral agreements with the EU and individual member states take after Brexit?
- How will the UK adapt EU laws domestically, particularly in relation to possible changes to the supervision of financial markets as well as the approval and certification of products and financial undertakings?
- Will the UK still be classified as a ‘similarly regulated country with similar regulatory authorities to the EU member states’?
- What impact will Brexit have on tax agreements regarding financial products and cross-border services?
- Will Great Britain seek accession to the EEA via this agreement and by meeting certain criteria and standards in order to obtain easier market access?
We offer active support in solving the business policy conflicts arising from the above and a means to bypassing the uncertainty which exists for UK-based financial market actors.
The advantages of MainFirst Affiliated Fund Managers S.A.:
Luxembourg, as a ‘Gateway to the European Community’, offers a solid and stable financial centre.
We are a reliable partner for the individual structuring and administration of Luxembourg-based investment vehicles and have the necessary expertise and administrative capabilities.
We offer you our knowhow and our team of experts. Owner-run and independent, we do everything we can to meet to your requirements at all times.
We see ourselves as your long-term partner, who will stand at your side and provide the bridge for entry to the markets of the EU member states.
MainFirst Affiliated Fund Managers S.A. is an independent, owner-managed public limited company under Luxembourg law, held by MainFirst Holding AG in Zurich. We are authorised as a management company in accordance with Chapter 15 of the Law of 2010 relating to UCITS and as an Alternative Investment Fund Manager (AIFM) in accordance with Chapter 2 of the Law of 12 July 2013. We are also specifically authorised for the individual management of separate portfolios and for the reception and transmission of orders within the meaning of Article 5 (4) of the Law of 12 July 2013. We currently manage 14 Luxembourg fund structures with fund assets of around EUR 3 billion.