EU should avoid Brexit ‘regulatory competition’(1)

EU countries should not compete to attract fund managers in light of Brexit, said ESMA chairman Steven Maijoor at a Luxembourg conference.

The chair of the European Securities and Markets Authority, Steven Maijoor, has issued a warning against EU countries competing with each other on regulatory grounds.

Speaking at the ALFI European Asset Management Conference in Luxembourg, he said Brexit should not encourage reforms which would harm existing regulatory or supervisory frameworks.

“We’re all aware that some London-based market participants are looking for a new location in the EU, and when making that decision, it’s key that the EU 27 do not compete on supervisory or regulatory treatment,” said Maijoor.

“I fully understand that financial centres across the EU try to make themselves attractive to UK market participants, that they try to be efficient and fast. But what we cannot have is a situation where we embark on regulatory competition, supervisory competition, and where we undermine the robust standards of supervising.”

On the issue of financial passporting – an EU initiative allowing financial services companies to market across the bloc from one headquarters – Maijoor reiterated that it would be reviewed as part of a wider process.

“Regarding asset management, first of all, we’re planning a large study on the long-term performance of capital markets. A second area [we’re looking at] is the removal of barriers between the national member states. As you’re aware we have the national passporting system, but the question is, is it running smoothly and as efficiently as it could?” he said.

Toward the end of his address, Maijoor said there were lessons EU asset managers could learn from their US counterparts.

“There are many things from the US that we shouldn’t copy, and we should go our own way. But one area we can learn from the US is in terms of cost performance of asset management,” Maijoor said.

“Also, on the role that asset management can play in our society. I truly believe that the capital markets union can stimulate and allow the asset management industry to play a bigger role in our financial system.”