ESMA has published three opinions setting out sector-specific principles to support supervisory convergence in the context of requests from UK financial institutions seeking to relocate to the EU27.
The opinion on Investment Management covers UCITS and AIFMD structures, and delegation to MiFID investment firms. Most of the content is not surprising and what we already know about regulators' considerations when an asset manager is establishing in their jurisdiction, but it does indicate a change of tone from ESMA in respect of Brexit relocations, particularly in relation to substance requirements on delegation. The underlying message is that ESMA is requiring EU regulators to be tough on proposed relocations and, in particular, any proposals to delegate functions back to the UK.
Non-EU asset managers with EU fund structures (e.g. U.S. managers acting as delegates to EU management companies) should also follow this development, as the ESMA opinion and the EU regulatory reaction to it are relevant not only to UK managers looking to relocate to the EU, but also to non-EU managers who are part of EU fund structures.