Funds With $10 Trillion Targeted by EU Alert on Letterbox Firms
- ESMA may soon refine post-Brexit opinion on UCITS fund regime
- Asia, U.S. managers using Luxembourg address may be affected
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Investment firms may have to move thousands of jobs to the European Union after regulators said “letterbox entities” nominally based in the EU but run from abroad will not be tolerated, lawyers and advisers say.
The proposal would affect UCITS, a type of mutual fund domiciled in the European Union, that hold about 9.1 trillion euros ($10.3 trillion) of assets. The European Securities and Markets Authority said in May that passports to sell funds -- effectively, a stamp of approval allowing fund managers to offer a product globally -- should be rejected unless major decisions are made by management based within the bloc.