As the Brexit date approaches, companies’ various plans are maturing. Many British asset management companies have set up entities in the EU, relocated parts of their workforce, and rewritten their models to adjust to the new UK/EU relationship—whatever that will ultimately be. Likewise, EU entities have set up plans for doing business in the UK after 29 March 2019, Brexit’s (current) go-live date.

On this page we take a closer look at the actions and reactions in the asset management sector. Keep reading for the main Brexit impacts, to-do lists for entities in these sectors, companies who have already relocated, and other valuable insights.

Brexit impact

  • The industry is potentially facing the single biggest impact on cross-border financial services in a generation.
  • Equivalence regime: there is a diversity of “third country” provisions under different pieces of EU legislation and some have no formal “equivalence” regime. The provisions in MiFID II, AIFMD, and the UCITS Directive are all quite different, for example.

    Equivalence regimes cover only a subset of the activities that currently benefit from passports for EU firms. Therefore, unless the final trade agreement between the EU and the UK includes arrangements for UK firms to continue to benefit from all EU passports (which, politically, seems unlikely), Brexit will result in EU27-UK cross-border business being prohibited or restricted

Asset and fund managers that have announced relocation to Luxembourg

relocation to Luxembourg

Implications of the loss of the three key EU passports:


UCITS are by definition EU-domiciled funds with EU-domiciled ManCos. Therefore, absent a specially negotiated deal and changes to UCITS legislation, UK UCITS will no longer be UCITS, and UK ManCos will no longer be able to be ManCos for EU27 UCITS. EU27 UCITS invested in UK UCITS may have to divest, unless UK ex-UCITS are accepted as “equivalent”.


Unlike the UCITS Directive, both AIFs and AIFMs may be EU or non-EU. Therefore, in theory, there is nothing at the EU level to prevent EU27 AIFs from continuing to be sold into the UK (and vice versa), or for EU27 AIFMs to manage UK AIFs (and vice versa).

However, the AIFMD non-EU passports have not been introduced and a number of the EU27 do not have, or have very restrictive, private placement regimes. If UK AIFs cannot be sold in these countries, there is a political risk that AIFs domiciled in those countries will not be able to be marketed into the UK.

Investment management of funds

Both the UCITS Directive and AIFMD allow the investment management function to be delegated, provided there is still “substance” in the home Member State.
ESMA is promoting a common understanding of the substance requirements for UCITS ManCos and AIFMs. It has also called for the disparate third country regimes in EU legislation to move to a common approach. Brexit adds political momentum to both these debates.

Investment management of separately-managed accounts

Under MiFID II, UK firms should be able to continue to provide investment management services to EU professional clients. However, the client may itself be subject to national rules that restrict its choice of investment manager (e.g. some pension funds). This is mainly an issue for UK-based investment managers, but, again, there is a political risk of similar issues for EU27 firms that provide investment management services to UK professional clients.

In the wealth management arena, EU27 firms may not be able to market their services to UK clients, and vice versa.


MiFID II also regulates the distribution of funds and investment management services. The common practice of sales people moving freely between UK and EU27 will be curtailed.

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