A "dual funds regime" will help asset managers deal with Brexit, "the biggest challenge facing the industry since the financial crisis", according to a financial regulation think tank.
The New City Initiative (NCI) has called on the Financial Conduct Authority to run two regimes, one that is EU compliant and therefore can be granted equivalence by the EU, and one that is more international in its focus. Both regimes should be for UK domiciled funds, the NCI said.
In its report, the think tank said a dual funds regime would bring revenues to the UK and create new opportunities across financial services.
"The outcome of negotiations will not be known for some time, but the government should be considering how it could leverage the UK’s deep expertise in fund management to create a truly bespoke funds regime, which would allow managers to market into both the EU and rest of the world," it said.
Jamie Carter, deputy chairman of the New City Initiative, said: “The NCI believes that if the UK government set up a dual funds regime, it would help provide stability to the UK and EU asset management space.
"A dual funds regime would allow UK managers with European Union interests to continue to comply with EU laws and directives and retain favourable access to their EU investors, while simultaneously letting others market to the rest of the world ex EU, and avoid the worst excesses of EU regulation. Such a regime may also enable fund managers to avoid re-structuring their businesses to onshore EU locations such as Ireland and Luxembourg, provided equivalence for the UK is granted."