Brexit and Ireland
The result of the UK’s referendum on EU membership and the impact it is having and is likely to have has been the most significant and unanticipated European political event of the last 20 years. While much is still unclear about what the outcome from negotiations will be, we can be certain of the Irish fund industry's role and determination to assist managers, irrespective of their starting point, in achieving their cross-border distribution goals.
Assisting Fund Managers
While there has been considerable volatility both in the markets and political landscape, fund managers’ needs pre- and post- the Brexit result have not fundamentally changed. Managers continue to look to:
- Further their objectives to grow and scale their business cross-border by accessing passports for products and services
- Utilise effective EU-based national regulatory and taxation regimes
- Have available the expert knowledge and skills across a range of providers covering the full breadth of investment strategies and asset classes
- Have the ability to conduct business efficiently with regards to language, legal system, service culture and cost
Our members are continuing to help managers and provide solutions and as Ireland has addressed needs in the funds industry successfully for more than 20 years, it will continue to do so post-Brexit.
Scale and Nature of the UK - Ireland Relationship
The funds industry here remains focused on its continued ability to provide seamless access to key financial services passports, as well as to assist global and regional players examine the specifics of their product, service and distribution footprints and the business models and structures which support them.
Ireland remains a committed member of the European Union and will remain so, providing full market access to the EU. As Ireland is in the same time zone, English-speaking, and also has a common law legal system, it means we are well-placed to assist managers.
Regardless of the direction the UK’s exit from the EU takes we will develop and enhance our relationships with UK managers, this in turn is likely to strengthen the Irish funds industry.
Industry Areas of Focus
With the initial shock of the UK’s exit vote now in the past, the industry has moved towards planning and action to ensure continuing access and guard against some of the possible negative impacts of Brexit. Moving forward, there will be a series of junctures along the way which will require those in our sector (and beyond) to map their businesses in terms of products/services, clients, markets, delivery mechanisms, operating models and business structures against what will be a slow emerging new reality.
Developments and areas where questions are arising more recently are:
- Management companies ensuring access to the EU market post-Brexit – With regards to UCITS, ManCos are showing an interest in setting up Irish UCITS ManCos (where the product holds the passport) and for UK AIFMs, to preserve EU marketing access by establishing Irish AIFMs, appointing Irish AIFMs or using platforms.
- Segregated mandate solutions under MiFID – questions are arising surrounding potential issues where EU-based clients want to contract with EU-based providers of services.
- Pension funds and preserving tax transparency – there has been an increased focus on preserving tax transparency and increased queries on Irish Common Contractual Funds (CCFs).
- EU Insurance Regulation / Solvency II Directive – concerns are being voiced regarding the impact of more onerous liquidity requirements on how collateral is provided and if funds/funds units can play a part in a solution.
Priorities Going Forward
Brexit adds a new and significant dimension to the Association’s multi-faceted work and outreach. As always, our focus is that the ‘system’ here is prepared and welcoming to help new and existing clients. In moving into territory where the end-position and duration are not and cannot be fully known, our priorities are to:
- Maintain the existing ability to distribute Irish funds into the UK
- Engage with our members and stakeholders and handle inbound queries from managers and service providers
- Advocate to government and the authorities here regarding the importance of readiness for the funds industry
- Work to minimise the disruption to existing / future business models
Continuing on our already strong advocacy platform, we are engaging with the Irish government, the Central Bank of Ireland and agencies to keep the funds industry high on the agenda in Brexit and related discussions and to ensure that the environment and infrastructure is available to provide solutions to those who need it.
Alongside our 38 Working Groups, we are identifying and working through positions which may arise in negotiations, engaging with EU colleagues on these matters, and developing communications and informational materials. We are regularly meeting with our members, stakeholders and peers to listen, handle queries and act responsibly.
Brexit Online Resources from our Member Firms
Read commentary and analysis by our member firms on Brexit and its effect on the investment funds industry. There are also publications available for viewing and downloading further below.
A&L Goodbody on the post-Brexit legal environment and impacts on businesses. Read more.
Brown Brothers Harriman's ongoing commentary on the implications of Brexit. Read more.
Deloitte on the changing market and what Brexit means for Irish businesses. Read more.
KPMG on the risks, opportunities and the impacts associated with Brexit. Read more.
Maples and Calder on the latest legal and regulatory developments on Brexit. Read more.
Mason, Hayes & Curran on the impact of Brexit on the investment funds sector. Read more.
Matheson on the implications of Brexit for asset managers and investment funds. Read more.
McCann FitzGerald on Brexit from a legal perspective and various implications. Read more.
PwC on the post-Brexit asset management environment in Ireland and the UK. Read more.
William Fry looks at the key issues and Brexit planning for your business. Read more.