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20 August 2018

Financial Times: Asset managers draw up plans for hard EU exit

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Nearly two-thirds of asset managers are preparing for a “hard” Brexit scenario of the UK leaving the EU single market and customs union, as the negotiations between Brussels and London head into a critical phase.

A survey of fund houses that collectively manage $14tn of assets found that companies are increasingly focused on responding to the UK’s impending exit in March, as fears rise about a no-deal Brexit that would cut them off from investors.

Some 83 per cent of those polled have response plans for Brexit, while 49 per cent have already put those plans into action, according to research from Liquidnet, the trading venue.

Rebecca Healey, head of Emea market structure and strategy at Liquidnet, said that the “sands have shifted” in recent months, leaving many fund managers increasingly worried.

“Given the state of flux and conflicting messages they are getting from UK and EU authorities, [asset managers] are having to work towards a hard Brexit rather than wait for potential political solution,” she added.

The Liquidnet survey found that 87 per cent of respondents were planning to keep their trading desks where they are, although many said this could be temporary.

Julie Patterson, head of asset management regulatory change at consultancy KPMG, said asset managers with professional clients should have applied for new or enhanced licences in the EU by now.

“A number of national regulators said before the summer that any applications for new or changed licences submitted from July onwards could not be certain of a response before Brexit day,” she warned.

As well as being able to maintain access to clients, Ms Healey said asset managers could also face trading challenges after Brexit.

“Asset managers have been very focused on their product and distribution [in a post-Brexit world]. Now they are starting to ask how they will get their trades executed.”

Full article on Financial Times (subscription required)

© Financial Times

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