Fides Weekly Update – 26th May 2017

Hello and welcome to the Fides Weekly Update.  Here we provide analysis on the key news stories in legal and compliance this week. Follow us on Twitter and LinkedIn for more insights!

This week Consultant Max Alfano brings some of the main themes discussed in Tuesday’s London conference hosted by the Association of the Luxembourg Fund Industry, which focused the landscape of the Asset management industry in a European context.

From UK to Luxembourg: Asset management landscape in the wider European market  

This week we attended the Association of the Luxembourg Fund Industry (ALFI) London Conference. There were a number of topics raised that centred around Luxembourg and wider European market, as well as the regulatory and macro-economic challenges for asset managers at present and in the future.

There was a clear agenda for marketing and drawing investment to Luxemburg, which was highlighted by the Minister of Finance Pierre Gramegna’s initial address, drawing on the special relationship Luxembourg has with the UK and how they are in a prime position to maintain this in a post Brexit EU.

Luxembourg is clearly a desirable destination for the funds and asset management as funds have been domiciled predominately in the region (as well as in Ireland) and utilise passporting rules to ensure management of the funds remains in another larger European hub.

CSSF: A regulators view 

Jean-Marc Goy, counsel for international Affairs at the Commission de Surveillance du Secteur Financier (CSSF), spoke at length around “substance” requirements and perhaps more crucially provided some insight into how the CSSF approaches the question of substance.

He goes on to discuss their focus around Substance requiring a minimum of operations, IT, People, Oversight and Monitoring. There is no one size fits all model, they look on a case by case basis and are able to utilise an Onsite team to act as there market surveillance function.

Goy was interviewed by a compatriot Freddy Brausch (Partner and co-head of the investment management sector at Linklaters), where they discussed ESMA’s views on the UK in a post-Brexit environment, in regards to management of funds from a non-member states.

ESMA’s standpoint lies with a hard Brexit in terms of funds, which would mean significant collateral change for many funds and asset managers, whilst Luxembourg and Jean-Marc’s view is slightly more cautious as to what would actually be feasible in shifting significant “substance” away from the UK.

Distribution landscape

Predictably the Passive vs Active argument arose and we saw Vanguard jostling with Aberdeen over the best ways to draw investors to the most favourable product offering.

Richard Withers (Head of Government Relations at Vanguard) argued that the common perception is that Vanguard are the leaders in the passive investment market; however, they view themselves at cost leaders driving competitiveness within the market.

A clear theme for all firms and for the industry as a whole was the need for the industry to remain at the head of innovation utilising technology as the market sees further consolidation and competition; to remain competitive firms can no longer rely on reputation alone.

Campbell Fleming (Head of Distribution, Aberdeen) commented that it is the most challenging time he has been in the investment management industry however there is still significant investment opportunity for firms willing to move with the times.

Macro trends

Naim Abou-Jaoude (CEO Candriam Investors Group) echoed Campbell’s words, commenting that structural drivers make it the hardest time for the asset management industry, namely low interest rates cost pressures, regulation, client senses, passive management, globalization and concentration on bonuses. However, margins are still high if you can generate the alpha.

In the EU 41% of wealth across the region is currently sitting in 0% or negative interest accounts whereas in the United States that number is 17%, meaning that there is a distinct lack of education or trust, with potential investors in the EU. This is also influenced by trends on a national level, that is Brexit, Le Pen, elections and Populist movements for example.

The future for the EU

Frieden Luc (Partner at Elvinger Hoss, Prussen) commented on the future of the European Union and regulation. He believes that for the EU to come out in a stronger position after Brexit there needs to be further consolidation and consistency of regulation between the major economies. He also iterated the need for harmonizing economies and creating a more centralised model which would lead to greater success.

Although this seems like a logical step, in reality creating centralisation and handing further control to Brussels whilst facilitating 27 member states to agree, might be slightly more challenging. Was it not for this very reason that Brexit campaigners built there argument in the first instance?

To find out more about this topic, contact Consultant Max Alfano at or +44 (0) 20 3011 0698

Movers & Shakers of the week 

Panel Watch

AIG confirms the 29 firms on its new UK panel

10 law firms are named providers on the London Universities Purchasing Consortium (LUPC) panel


Uber kicks off search for next GC

General counsel Salle Yoo has been promoted to chief legal officer for Uber technologies, with the company awaiting to fill her former position


Dentons nabs second magic circle practice head this month

Dentons has hired Louis Skyner as a partner from Clifford Chance, where he served as the head of its Russia and CIS energy practice

W&C star PE duo split as one heads to rival US firm

Co-head of private equity at White & Case Richard Youle departs the firm to join Skadden Arps Slate Meagher & Flom with fellow private equity partner Katja Butler

Quinn Emanuel continues to build out Brussels practice

Sherman & Sterling competition partners Stephen Mavroghenis and Miguel Rato quit the firm to join Quinn Emanuel Urquhart & Sullivan in Brussels

Linklaters makes addition to London restructuring team

Restructuring partner James Douglas has exited his current firm Ropes & Gray to join Linklaters in London

Office Openings & Closings

Winston & Strawn is the next US firm to slim down Asia operations as it faces office closures in Beijing and Taipei

Sullivan and Cromwell launch Brussels office after hiring competition partner Michael Rosenthal from Wilson Sonsini Goodrich & Rosati

Mergers & Alliances

Dentons plan to launch Peru offering through local tie-up with Gallo Barrios Pickmann

Partner Promotions

Kennedys promotes four women to partnership

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