Our Brexit FAQs
After almost two years of effort, much of our pre-Brexit preparations is already complete. We extended the regulatory permissions of our Luxembourg entity to ensure we are able to continue existing business relationships in the EU/EEA with minimal disruption to clients and counterparties. We have also taken the opportunity to consolidate the existing EU management company operations in Ireland and Luxembourg within a single structure in Luxembourg, recognising there were efficiencies to be gained in terms of infrastructure, resources and capital.
We continue to maintain a dedicated Brexit programme and work streams focused on identifying any likely service-level disruptions and to recommend contingencies to mitigate disruptions. We have also been liaising with our Investment Management delegates to determine what areas of impact to contracts with EU counterparts and the extent these will need to be novated in the event of a ‘hard’ Brexit. As we have existing service offerings across Europe, as well as in the UK, we consider it a priority to maintain service levels throughout this process.
BNY Mellon Investment Management is in a strong position to manage the effects of Brexit on our business and on our clients. We have a strong presence in both the UK and the European Union (EU) and operate two flagship UCITS umbrella fund ranges: BNY Mellon Global Funds plc (BNYMGF), domiciled in Ireland, and BNY Mellon Investment Funds (BNYMIF), domiciled in the UK.
Distribution of our UK-domiciled funds, BNYMIF, to UK clients will continue as it does today.
Distribution of the EU UCITS umbrella, BNYMGF, to UK clients will continue in the event of a no-deal Brexit under the UK Government’s temporary permissions regime (TPR). The TPR aims to ensure EEA investment firms and funds currently operating in the UK under the existing EU passport mechanisms can continue to do business as they do today. This will be for a temporary period of three years following the UK’s exit.
During this transition period we will have an opportunity to apply for full authorisation (firms) or recognition (funds) in the UK and intend to do so. The board of BNY Mellon Global Funds plc approved participation in the TPR and notification was made on 1st March 2019.
At this stage we have not identified any incremental costs or charges in respect of management and administration, which would be borne by the sub-funds as a result of Brexit. In the event that there are incremental costs and charges arising, these would be disclosed to investors in accordance with the relevant regulations.
However, it should be noted there are certain transactional costs to which the sub-funds are subject, such as market spread, that are driven by markets and to the extent such costs may increase as a result of Brexit is obviously beyond the control of the Manager / Investment Manager.
Liquidity of all sub-funds are constantly reviewed to ensure portfolios are being managed in line with the redemption terms offered. To date no major issues have been identified from this analysis.
A no deal Brexit will have an impact, the full extent of which remains unknown. However, we believe we have taken appropriate steps to put the necessary infrastructure in place to minimise any disruption for both our UK and European clients. We have expanded our European presence, building on our existing offices. We are now using our existing management company in Luxembourg to support our business operations within the EU/EEA, having extended the regulatory permissions of this entity to ensure we were able to continue to fully service our European client base.