Steven Maijoor, Chair of the European Securities and Markets Authority (ESMA), has delivered a keynote speech which casts doubt on the continued ability of UK financial institutions to operate under mandates delegated from EU firms post Brexit.

Speaking at a public hearing on Capital Markets Union at the European Commission in Brussels, Maijoor emphasised that European regulators must not compete on regulatory and supervisory treatment of UK-headquartered firms that are considering their options in the wake of Brexit. One "risk" of this, he said, would be that UK firms might seek authorisation from a European regulator and outsource or delegate activities back to the UK noting that ESMA is considering "potential limitations to outsourcing and delegation". The speech also revealed that EU regulators will be sharing information about Brexit-related applications from UK-based asset managers on a live basis to help combat arbitrage.

Although no specific measures are currently proposed, these statements may cause concern to UK asset managers and other financial institutions who plan to operate activities from the UK on mandates delegated by EU-firms within or outside their corporate group.

It is not clear at this stage whether the concerns Maijoor highlights are driven by issues of substance, supervision, protectionism and/or other factors. ESMA will discuss this in a general opinion on cross-cutting issues to be published "before the summer". This will be followed by specific thematic opinions on asset management, investment firms and secondary markets.

As a key adviser to the UK Asset Management and Funds industry, Eversheds Sutherland is continuing to track this and other Brexit-related developments. For more information, firms can visit our Brexit Hub or reach out to their usual contacts.