Global Trustee and Fiduciary Services News and Views Issue 48

Global Trustee and Fiduciary Services News and Views

| Issue 48 | 2017

topic for discussion. Where this is the case, this

introduces its own new challenges.

These are well known in respect of AIF and

offshore models, and more recently these have

been more popular for new startups, even

in the UK, because of the cost of entry for a

new ManCo: this has led various investment

managers to use hosted arrangements.

While host ManCos, and SuperManCos

encompassing other investment services for

EU clients, have their theoretical attractions,

prudence would suggest that investment

managers work through all the practical

implications of hosted solutions.

There are drawbacks for the investment managers,

principally loss of control and influence at the

core of the product structures. A hosted solution

might be viewed as isolating the product provision

and its risk management from the day-to-day

investment management. The investment manager

may legitimately take the view that it is only

interested in the latter, the day-to-day investment

management. But using the hosted solution does

change the whole product provision dynamics from

those models that have traditionally been used —

with asset managers having their own ManCos. So

investment managers should appreciate the full

ramifications of using the hosted model before

going down that route.

Future provision of MiFID investment services

to EU clients

Whether using one’s own ManCo or a host

ManCo arrangement, a common question UK

asset managers are asking is whether the

ManCo can offer a suitable EU base for provision

of ancillary investment services to EU-based

clients. This could solve a problem that many UK

asset managers face, if and when the UK MiFID

firm passports are switched off.

Positive action will likely be required with regard

to MiFID investment services provided under

segregated mandates directly to EU-based

clients. Generally, to the extent necessary, they

have been using their UK-based investment

management firms with a MiFID passport to date.

Unfortunate variances exist in the current

interpretation of MiFID I application — with

regard to whether or not services are provided