Scottish finance body welcomes post-Brext ‘passporting’ rights development

Scottish Financial Enterprise, the trade body that represents the nation’s financial service industry, has welcomed news that the European Securities and Markets Authority could be set to put in place provisions that would allow UK investment managers to operate in EU markets post-Brexit.

The move by the authority would see the extension of “passporting” rights to asset managers from non-EU countries and allow those approved to continue raising private equity and other non-retail funds from investors across Europe, replacing the previous system of country-by-country authorisation.

Following an assessment, nine out of 12 countries were deemed to have “no significant obstacles” in their regulatory schemes to equivalence under the Alternative Investment Fund Management Directive, namely the US, Canada, Japan, Hong Kong, Singapore, Australia, Switzerland, Jersey and Guernsey, though with provisos in some cases.

Lawyers said the development was positive for the UK and a possible blueprint for a post-Brexit ‘equivalence’ deal.

Graeme Jones, chief executive of Scottish Financial Enterprise, said: “This is an encouraging development and one which will be taken into consideration alongside the other challenges and opportunities which leaving the EU presents the financial services industry.

“It is important that the best deal is struck, in the negotiations which lie ahead, to provide optimum access to the EU market. We would encourage negotiators to consider all options available for the UK to maintain, or regain, passporting access to the single market.”

Paula Kennedy, of Burness Paull, said: “What could happen is that the UK could have these passports extended to it in the same way. You would hope that the UK would not be a tricky jurisdiction for ESMA to form a view on.”