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Open Europe and New City Initiative have published a new report proposing that EU-based asset managers who do not market their funds into other EU countries be exempted from EU regulations, given that they take no advantage from the EU passport. The report also calls for the removal of national barriers to the distribution of funds domiciled in other EU member states, as these hurdles contradict the spirit of the single market.
20 July 2015
The plans for an EU Capital Markets Union present a big opportunity to establish alternative funding opportunities for businesses and help steer investment where it is most needed. In such a context, the asset management industry could play a vital role. However, the EU should ensure that European asset managers are not bogged down by disproportionate EU regulation and can take full advantage of the single market without facing extra costs when distributing their funds across the 28 EU member states.
Open Europe and New City Initiative have published a new report setting out six recommendations to safeguard a sound and vibrant European asset management industry, which could provide vital new growth opportunities at a time when Europe is struggling to unlock investment.
The recommendations are:
EU membership offers UK asset managers the chance to access a potentially huge pool of capital. However, despite the introduction of a ‘passport’ that should allow asset managers to do business across the EU once authorised by one EU member state, regulatory and administrative hurdles remain in place at the national level that make it harder to take full advantage of the single market.
In this paper, we estimate that a UK-based fund manager marketing and distributing in all the other 27 EU member states plus Switzerland would face total initial costs of over €1.5 million. Total on-going maintenance costs – allowing for the continuation of cross-border marketing – could be near €1.4 million per year.
These costs can represent an entry barrier for smaller asset managers, and contradict the idea itself of a single market. The asset management industry can play a vital role as an alternative source of funding for businesses across Europe – thereby helping economic recovery. Therefore, a functioning single market for asset managers is in everyone’s interest.
If you cannot see the PDF reader below, please click here to access the full report.