European Union regulators should avoid trying to fix problems that don’t exist in operating cross-border investment funds, Luxembourg’s financial regulator said on Monday.
The EU’s securities watchdog ESMA has suggested a tightening of rules that allow portolios of funds domiciled in Luxembourg, Dublin and elsewhere in the bloc to be managed from non-EU centres like London after Brexit.
“We have to be watching very carefully,” said Claude Marx, director general of Luxembourg’s financial regulator CSSF.
“I have sometimes the impression that we may be looking to fix something that has never been an issue,” Marx said.
Many of the funds domiciled in Luxembourg and Ireland are run by managers in London.
Britain left the EU in January and, after transition arrangements end in December, will rely on so-called “delegation” for cross-border asset management to continue.
ESMA has said that temporary Brexit safeguards to stop asset managers running “shell” fund companies in the EU should be hard-wired into the bloc’s laws.
The EU watchdog, on whose board Marx sits, said there was merit in having “clearer legal drafting” on the minimum number of staff that fund companies must have inside the EU.
Corinne Lamesch, chair of the Luxembourg funds industry body Alfi, said Marx’s comments were “music to the ears” of asset managers.
“We have an ecosystem which works very well. Like building a car, you take pieces from different countries. We are doing the same,” Lamesch said.