Market access and facilitating post-Brexit investment flows
05 March 2021
Dr Andy Sloan, Deputy Chief Executive, Strategy, at Guernsey Finance, says that Guernsey’s continuity of market access and strong international reputation will help to smooth the flow of cross border capital post-Brexit.
Global Guernsey possesses a positive “double whammy” of continuity and certainty which is highly prized by global fund professionals in today’s uncertain world.
Guernsey has often watched – with a calm detachment – the waxing and waning of the UK’s mercurial relationship with the European institutions over the past half a century.
The island, whose relationship with Britain is through the Crown, remained outside of the European Union during the 40-plus years of British involvement. Guernsey was never a member of the EU and was always, and still is, considered a third country in areas of our own competencies, namely tax and legislation. This continuity is especially valuable to global investors, given there still remains huge opacity in the future relationship between UK and EU in financial services.
The net result is that the basis and operation of our access to Europe’s financial services markets remained unchanged after Brexit. Our relationship with the European Commission and the European ESAs and national competent authorities for tax and regulation remain unchanged. We had various equivalences that remain unchanged, data protection being one. Significantly for the funds sector, our private placement MoU’s with the EU27 regulators also remained unaltered and agreements under NPPR stay the same. Our old ESMA-facilitated MoU under AIFMD with the FCA was re-papered across to work in a post-Brexit environment a long time ago.
As a result, Guernsey offers continuity, certainty and stability. A potent mix, highly regarded in particular by global investors, especially those looking for a tried and tested route to market into EU and the UK.
Our current MoUs with the EU27 remain as they were. National Private Placement Regimes under AIFMD always provided a proven, faster and cheaper route to market than the passport. No change there either.
A Guernsey AIF can still be marketed as before to investors in selected EU member states, regardless of whether the AIFM is domiciled inside or outside the EU. This means that a Guernsey AIFM can market and operate as before, something that cannot be said with certainty for UK-based AIFMs presently. That, and the avoidance of the burdensome complexity of the Senior Manager Regime, is highly beneficial to AIFs seeking capital from Europe.
In today’s challenging market, a proven, tested route to placing private funds can be the difference between success and failure of a fund launch. UK fund lawyers have described Guernsey’s proven position as “incredibly strong” and “arguably light years ahead” of the UK in terms of market access.
Guernsey has long played a bridging role, routing global capital between UK, EU and US markets. A smooth, proven path is something that is going to be more valuable than ever over the next few years to facilitate cross-border flows, with continued frictions in the relationships of others.
Allied to continuity of market access, Guernsey’s strong reputation provides major comfort. Longstanding compliance with international standards on regulation, tax transparency and beneficial ownership is of huge import, given global risk appetites. Guernsey’s track record in this area has fostered a deserved respected reputation – a premium for today’s investors.
For decades now Guernsey has been an attractive domicile for private capital given the combination of professionalism, substance and expertise of the firms operating here. It is how the island became the dominant jurisdiction in the private equity space. Continuing high service standards, strong international reputation, and proven market access is a potent mix for global investors, and why Guernsey continues to play a role on the global stage.Back to News
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