Potential Consequences Of Brexit For The Luxembourgish Fund Industry

UK asset and fund managers currently benefit from the EU Passport granting access for their Fund products to the EU market. There is - depending on the final post-Brexit model - a high probability that UK based Fund Managers will lose the EU passport for their Alternative Investment Funds and might think about reallocating their registered office to any other of the remaining 27 countries of the EU. For the Luxembourg Fund Industry, Brexit could bring many opportunities.

There are clear advantages for UK Fund Managers to re-allocate their business to Luxembourg and not to Dublin, Paris or Frankfurt. Luxembourg, being the largest investment fund center in Europe, appears to be the ideal place to re-allocate the business, as it already offers the necessary international human resources and infrastructure combined with a business-friendly environment.

Most of the UK based Asset and Fund Managers already have subsidiaries or branches located in Luxembourg. In the view of Christine Jacquemart, Commercial Director in Fund Services at Intertrust Luxembourg, it would be the logical consequence that Luxembourg becomes the main entry point for UK based Fund Managers accessing the European Single Market.

The reallocation of UK Fund Managers to Luxembourg would consequently increase the number of employees in Luxembourg.

The new relocation guidance from ESMA, Europe's top financial markets...