Brexit was nothing if not a collective act of wishful thinking, a group of English (and Welsh!) people banding together, closing their eyes and jumping into what was quite clearly—to those with eyes open—a bottomless cavern of decreasing relevance and increasing insecurity, but which those doing the jumping hoped would turn out to be greener grass and milk and honey once they opened their eyes. There, they’d be able to have their cake and eat it, too.
Among the most fanciful bottomless slices of cake pedaled by unscrupulous Brexiteers was that the U.K.’s erstwhile partners would not take the opportunity to gut the City of London like a fish (another somewhat contentious issue these days) and that the British, having voluntarily surrendered their place at the table, would be able to protect its all-important financial services industry from those continental sorts who’ve never much cared for hedge funds and the like. As it turns out, without interference from the Anglo-Saxons, the Germano-Gallic impulse to regulate alternative investments can proceed unmolested—and can be imposed on those Anglo-Saxons, anyway, if they’d like to maintain any clients across the Channel.
ESMA said there was merit in providing “clearer legal drafting” in the bloc’s laws on substance and delegation requirements in line with its earlier Brexit guidance.
The EU may want to back up the “qualitative” criteria on substance with clear quantitative criteria, or provide a list of core or critical functions that may not be delegated at alternative and mutual funds, ESMA said.
A pending review of EU alternative fund rules that cover hedge funds and private equity funds was an opportunity to consider “greater harmonisation” with regulations governing mutual funds known as UCITS, ESMA said.