No need for tighter EU rules on where asset managers are located, say funds

By Huw Jones and Carolyn Cohn

LONDON, Sept 15 (Reuters) - Senior fund managers have pushed
back against a call from the European Union securities watchdog
for tighter rules on where industry officials are located,
saying the coronavirus pandemic has shown "boots on the ground"
matter less than ever.

The bloc's securities regulator ESMA surprised the sector
when it wrote to the European Commission to say stricter
conditions may be needed for delegation, or when asset managers
outside the bloc pick stocks for funds domiciled in major EU
fund centres like Luxembourg and Dublin.

Delegation has become politically sensitive due to Britain,
where many asset managers pick stocks for EU funds, leaving the
bloc in January.

ESMA suggested "clear quantitative criteria" on the number
of senior officials a fund must have where it is domiciled.

"What we have not seen in this letter from ESMA is much of
an explanation, much of the evidence that actually would explain
why a change from the current arrangements is actually
necessary," said Michael Collins, director of government affairs
at M&G.

"The case has not yet been made," Collins told an online
conference held by Luxembourg funds industry body Alfi.

Sheila Nicoll, head of public policy at Schroders, said
regulators were still wedded to the idea that physical and
geographical presence mattered when it came to supervising
funds.

"It seems to me that actually COVID-19 has shown us that
that doesn't matter," Nicoll, a former UK regulator, said,
referring to an industry where many have worked from home since
pandemic lockdowns began in March.

"I can be subject to Italian rules or French rules or German
rules or Luxembourg rules whether I'm sitting in London or I'm
sitting in Amsterdam or Milan. The crisis may cause us to think
a bit differently about this," Nicholl said.

Martin Parkes, managing director of public policy at
BlackRock, said it was important to bear in mind the value of
delegation in allowing investors to access the widest range of
investment opportunities.
(Reporting by Huw Jones; Editing by Jan Harvey)