ESMA has published, as promised, its set of sector-specific opinions on relocations from the UK to the EU27 following Brexit. The opinions cover investment firms, investment management and secondary markets. In each case, it looks at the risks to supervision and of regulatory arbitrage in firms seeking to relocate and then outsourcing activities back to the UK as their country of origin.
As previously noted, ESMA is concerned about the creation of letter-box entities and entities where more key activities are performed outside the EU than within it. It notes its concerns about where firms have close links with non-EU entities (as the EU will be) and, for example, the need for total compliance with the MiFID 2, UCITS and AIFMD requirements. It says the purpose of any outsourcing must be understood and must not be done to circumvent any EU requirements.