European Asset Management Conference 2021 - Wrap up of Day 2

Emmanuel Gutton, Director Legal & Tax, ALFI, reminded delegates of the Association’s Working Group efforts around the AIFMD review and how it has been pushing to make Luxembourg’s voice heard at the European Commission.

That baton was picked up by H.E. Pierre Gramegna, Luxembourg Minister of Finance. He touched on the resilience experienced not only by Luxembourg as a financial centre during the pandemic, but also the proven resilience of EU regulation intended to ensure the asset management industry can attract capital and manage it safely during a crisis.

Data in the wake of the pandemic has proved the sceptics wrong about the impact of human activity on the climate, thus illustrating the role the asset management industry must play in responding to the climate change challenge. And with some 80% of existing sustainable funds being European, there is a key ongoing role for Luxembourg as a financial centre in growing sustainable investments, he noted. What the government can do is create a fiscal and legal framework to not only support sustainable investments, but also facilitate digitalisation of the industry and make it easier for locally based businesses to attract international talent.

Elements related to Gramegna’s points - people, skills, outsourcing, operating models, technology and the shift from traditional to alternatives – were the focus of a panel constituting Rajaa Mekouar, Private Equity investor, former CEO and Chairwoman of LPEA, Eduardo Gramuglia, Senior Vice President, State Street Bank International GmbH, Luxembourg Branch, Brian McMahon, Managing Director - Global Head of Alternative Sales, Asset Servicing, BNY Mellon and Paul Conroy, Group Head of Real Assets, Aztec Group. As a panel, they observed that to an extent, the office of the future was on horizon even before the pandemic, but Covid had brought it into the present through use of IT, new working practices and the link to diversity progression.

Change has also come to third party management companies (‘ManCos’) and AIFMs, which was the topic discussed by Maria Löwenbrück, Executive Board Member, Union Investment Luxembourg S.A., Steve Bernat, Founding Partner, ONE group solutions, Arnaud Bouteiller, General Manager - Member of the Executive CommitteeCasa4Funds, and Martin Vogel, CEO, MDO, a DMS Group Company. While there may be no such thing as a typical ManCo client, they agreed that consolidation in the sector is coming, along with a new wave of tech implementation and automation to improve services, and a need therefore to engage with regulators.

Brexit and the practical challenges facing marketeers and distributors of funds was also in the spotlight, as Jerôme Wigny, Partner, Elvinger Hoss Prussen, Philip Bartram, Partner, Travers Smith, and Rupert Rossander, General Counsel (EMEA), Invesco, discussed the implications both for UK managers seeking European investors and European managers seeking UK investors.

Brexit has triggered practical and theoretical ‘workarounds’ for marketing and distribution, they noted. But regulatory risk remains, such as new law in the UK that will leave HM Treasury responsible for equivalence decisions. Lawyers meanwhile are left pondering legal 'salami slicing' of staff roles and identifying possible ‘chaperones’ for specific marketing and distribution purposes.

Wrapping up the day, Morningstar brought a Masterclass on SFDR and the EU Taxonomy, in which Olivier Goemans, Head of Investment Services and Innovation, Banque Internationale à Luxembourg shared thoughts around upcoming EU regulation. Hermen  Molendijk, Head of Morningstar Benelux, Tim Walton, Data Director, Morningstar, Margaret Stafford, Senior Product Manager, Morningstar, and Andrea van Dijk, Executive Director, Commercial Strategy EU Action Plan, Sustainalytics, outlined specific developments that users of investor data services can expect in the wake of the mountain of new data expected to be made available as asset managers and underlying companies held in portfolios respond to the new regulatory requirements imposed by the EU.