WF_Brexit

Asset Management & Investment Funds – Top 5 Issues (23 Dec 2020)

  1. New restrictions for both UK managers of Irish funds and Irish managers of UK funds
    UK managers of Irish funds
    At the end of the Brexit transition period on 31 December 2020, UK UCITS management companies will no longer benefit from authorisation as such and will be treated as third-country AIF managers or non-EU alternative investment fund managers (Non-EU AIFMs).  While, under Irish NPPR rules, Non-EU AIFMs (including UK AIFMs) can manage Irish QIAFs, they may not manage Irish RIAIFs and, as they will no longer be UCITS management companies, may not continue to manage UCITS.  Irish branches of UK AIFMs are similarly restricted.   UK UCITS will also no longer be authorised under the UCITS regime and will become non-EU AIFs. 
    Irish managers of UK funds
    To continue managing, post transition, any UK non-EU AIFs (formerly UCITS), Irish UCITS management companies must have/obtain authorisation under the AIFMD.
  2. Loss of passporting rights by UK managers
    UK managers selling Irish funds
    Post transition, UK managers, as non-EU AIFMs of either EU or non-EU AIFs, will no longer benefit from passporting rights under the AIFMD and marketing of AIFs will be subject to individual Member States' NPPRs.  In respect of UCITS, NPPRs may preclude the sale of funds by UK entities without a MiFID licence.
    Irish funds selling into the UK
    To continue marketing UCITS and AIFs in the UK, notification must be made to the FCA under the UK Temporary Permissions Regime (TPR).  The window for fund managers to notify the FCA that they want to use the TPR is currently closed but will re-open on 30 September 2020.
  3. Non-EU/third country restrictions to impact Irish funds' access to UK securities, markets and infrastructure - In the absence of EU mitigation measures or equivalence decisions for the UK, fund portfolios will need to be assessed and recalibrated to address the numerous regulatory restrictions triggered by the UK becoming a third country under such circumstances, including in respect of investment in UK securities, trading on UK markets, accessing clearing through UK CCPs, using UK-issued credit ratings, reporting to UK TRs and investing in UK benchmarks.
  4. Settlement of Irish securities no longer possible using UK CSD - The UK CSD will no longer be authorised under CSDR following the end of the transition period and Irish securities (including ETF shares) currently settled through the UK CSD will need to migrate to a new CSD.  A statutory process to allow Irish issuers (including ETFs) to migrate to Euroclear Bank, as replacement for the UK CSD, has been established however the CSD model operated by Euroclear Bank is structurally different to the UK CSD's model and careful analysis of the implications for individual issuers will be essential.
  5. New requirements for the transfer of investors' personal data -  As the UK will be a third country for GDPR purposes and in the absence of an EU equivalence decision for the UK, measures will need to be put in place to permit the transfer of personal data by an Irish fund/management company to the UK from the EEA. 

We have produced a Q&A checklist tool to assist fund promoters and managers in conducting a health-check of existing arrangements if no agreement were in place by the end of the UK/EU transition period on 31 December 2020.  The Q&A, which has been revised and updated on several occasions since its initial publication on 15 March 2019, highlights the principal impacts of no-deal in various situations, including related mitigation measures or consequences where no mitigation measures are in place.

Please click here or on the image below to download our Q&A checklist tool.

No Deal Checklist

Contact:

Dan_Morrissey_Brexit 
Dan Morrissey
Partner

Email Dan
+353 1 639 5220