Finance Dublin Article – Brexit Impact to Fund Distribution
Ireland well-placed to service investors and managers caught out by post Brexit distribution change
With fund distribution strategies at the heart of fund managers’ post Brexit planning we asked our panel of funds industry experts, in the light of Brexit and international regulatory development, where they see the biggest areas of opportunity in developing distribution strategies. We also asked if Brexit would be a positive or negative for Ireland as a centre for the distribution of global funds in the long term.
Opportunities to develop fund distribution strategies
The changing map of European funds distribution has created uncertainty for the funds industry and is driving strategy shifts across the entire funds value chain. Our panel identifies a number of opportunities that this environment is creating including in the related areas of proprietary management companies and third party management companies. Strategies are also being strongly influenced by MiFID II – increased costs under the regime are encouraging the growth of larger institutions operating at lower margins – this is itself is also creating opportunities for example in the area of sub-advisory by 3rd party managers
Tara Doyle, partner, Matheson:
At first glance, Brexit would appear to provide barriers to fund distribution, rather than opportunities. Particularly if there is a hard Brexit, which cannot be ruled out at this stage, the UK’s departure from the EU market will likely lead to fragmentation of the market as the current passporting system will not operate in respect of funds being sold into or out of the UK. However, from Ireland’s perspective there is an opportunity to play a more central role in fund distribution post-Brexit. While rules are not harmonised across Europe, many European jurisdictions require a financial services passport, whether under MiFID, AIFMD or the UCITS Directive, to market funds in their jurisdictions. With UK firms losing those passports as a result of Brexit, many managers and distributors are looking to Irish entities and EU branches of those Irish entities to implement their distribution strategies.