Brexit: The effects on AIFMD reform

By: Alastair Hewitt and Justin Meagher

European policymakers have to deal with Brexit and its implications, and this naturally supersedes AIFMD II. It is believed that an AIFMD market study (due to report mid-2018) has already been put out for tender by the European Commission (EC). This would delay any AIFMD II proceedings.

The UK’s non-participation in future AIFMD discussions will be most notable when third countries apply for equivalence to allow their home funds to market and sell into the EU. The European Securities and Markets Authority (ESMA) has already opined on several third countries such as Hong Kong, Singapore and the US. For some markets, ESMA saw little or no obstacle to giving their funds access to EU investors. Others (mainly the offshore centers) were told that further work is required. No progress can be made on third country equivalence without sign-off from EU legislatures, which has not yet happened. EU regulators have been lukewarm towards third country AIFMD equivalence. In fact, some including France’s Autorité des marchés financiers (AMF) and Luxembourg’s Commission de Surveillance du Secteur Financier (CSSF) have demanded that third countries offer the EU’s funds industry better reciprocity terms.

This is likely to result in further negotiations and delays and will also prolong the life cycle of national private placement regimes (NPPR).

Once Brexit is implemented, the UK will be considered a third country and will have to apply for passporting rights. The hardening attitudes among EU officials could make life very hard for the UK fund management industry, especially those who distribute across the EU. 

The Regulatory Solutions group at SS&C GlobeOp has more than 90 regulatory analysts that service more than 600 clients across all regulations. We work closely with regulators to monitor potential policy changes so we can move quickly when amendments are put in place. This gives our clients peace of mind and time to focus on generating returns for their investors. To learn how we can help you navigate the AIFMD reforms, contact