Six months after the U.K. voted to quit the European
Union, there's increasing uncertainty about the impact on the
hedge fund industry.
The British government has yet to trigger Article 50, which will
set a two-year clock for U.K. institutions to disentangle
themselves from the E.U. It's still unclear what that will
entail for U.K.-based hedge fund operators, as well as non-U.K.
managers with operations in London. U.K.'s Brexit czar,
David Davis, suggested on Dec. 1 that Britain
would consider making payments to the E.U. to ensure continued
access for U.K. businesses — similar to arrangements
Israel, Norway and Switzerland have with the union.
If the U.K. were to lose such access, hedge fund managers could
be cut off from investors on the Continent. To maintain their
marketing "passports" under the E.U.'s Alternative
Investment Fund Managers Directive, U.K. fund operators would
have to establish investment-management or risk-management
operations in other parts of the E.U., such as Ireland or
Luxembourg, said hedge fund lawyer Lucy Frew, a
partner at Walkers.
In a survey released Dec. 9, Preqin found that
70% of U.K.- based managers have no intention of relocating
operations. The U.K. is home to 63% of the hedge fund firms in the
E.U. and 80% of hedge fund assets, according to Preqin.
Originally published inHedge Fund
AlertDecember 14, 2016
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