FAQ UK withdrawal from the EU
This page outlines Insight’s plans to maintain an uninterrupted service for our UK and European (excluding UK) clients throughout the Brexit process.
How is Insight planning for Brexit?
Before the UK referendum on EU membership in June 2016, Insight created a Brexit programme, drawing on personnel from across the business and bringing in external advisors where necessary. A key objective of this programme has been to determine the best way to maintain the level of service we provide to our clients throughout the Brexit process.
Questions for clients in Europe (excluding the UK)
What is Insight's European strategy?
Creation of European hub
To support our European ex-UK segregated business Insight has taken the strategic decision to create a European hub. Our current plan is to expand our existing Irish funds business to fulfil this role. The reasons for this include:
- Ireland is the domicile of our existing pooled fund range
- our familiarity with the Irish regulatory regime
- the extent of relevant experience and capabilities we have within Ireland
- natural synergies including shared language, legal regimes etc.
Having undertaken detailed analysis of our options we have determined that the most appropriate strategy for us to serve our clients is to structure our European hub through the extension of the Insight Investment Management (Europe) Limited’s permissions to include individual portfolio management, investment advice and receipt and transmission of orders.
Frankfurt branch office
Insight opened a branch office in Frankfurt, Germany on 2 July 2018. We are now in the process of getting approval for a German branch of our European hub. The Frankfurt office is located at Insight Investment, MesseTurm, Friedrich-Ebert-Anlage 49, 60327 Frankfurt am Main.
How will this impact investment management and trading activities?
Portfolio management activities will continue to take place largely in the UK and US. The European Securities and Markets Authority (ESMA) has stated that it is in the final stages of drafting a memorandum of understanding to allow delegation of fund management services between the UK and EU and we expect this to be in place before 29 March 2019.
Questions for clients in the UK
What happens to UK clients with holdings in Irish-domiciled funds?
In the event that no agreement is reached in respect of the treatment of UK financial services as part of the EU negotiation, the FCA has committed to ensuring that funds based within the EU can continue to be sold into the UK in order to avoid any adverse impact on the UK investment management industry. The mechanics behind this commitment are currently out for public consultation.
The renaming of our Irish entity will require changes to fund documentation, but our objective is to align the timing of these changes with the annual documentation update cycle so as to minimise disruption.
Questions for all clients
What will be the impact on outstanding swaps and derivatives of Brexit?
We have conducted our own investigations, including meeting with key counterparties, to analyse the potential impact of Brexit on the derivatives portfolios of our clients. Whilst there are still outstanding Brexit related political and regulatory risks; at this stage Insight are not anticipating any impact to existing derivatives traded with UK counterparties or the ability to enter into new trades with UK counterparties. We also do not envisage any impact to EU-domiciled funds dealing with or with outstanding positions with EU-domiciled counterparties.
How will Insight prepare for potential market volatility?
It is likely that we will take some investment actions (e.g. reducing roll activity and/or raising additional liquidity) to help protect against the impact of a possible increase in market volatility around key dates. The extent of any actions would depend on how Brexit negotiations evolve.
What instruments must be cleared if the pension exemption on clearing is lost?
The instruments that would be subject to clearing are currently:
- LIBOR swaps from 28 days up to 50 years
- SONIA OIS from 7 days to 3 years
- 5 year iTraxx main and crossover
This list is likely to grow over time.
We advise that you seek your own external legal advice on issues created by Brexit and the impact they may have on you.