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BlackRock, GSAM plan to move to New York
January 20, 2019
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LONDON: BlackRock and Goldman Sachs Asset Management (GSAM) both plan to temporarily move some British-based fund managers to New York in the event of a no-deal Brexit, two sources disclosed.

The portfolio managers would eventually be transferred to mainland Europe to handle client accounts there once Britain and the European Union agreed a regulatory framework, they added.

But neither of the firms, who together employ more than 10,000 people in London, expects a chaotic exit that would force them to carry out the emergency relocation, the sources said.

A spokeswoman for BlackRock, which is the world’s biggest asset manager and manages around $6.3 trillion, declined to comment on the plan but in an emailed response to Reuters said:

“BlackRock maintains extensive regulatory licenses and permissions across Europe and globally to ensure it can continue to serve its clients post-Brexit.”

To avert such moves, the European Securities and Markets Authority (ESMA) is in talks with Britain’s Financial Conduct Authority (FCA) on agreements which would oversee cross-border asset activity and managers.

The US makes sense as a temporary base for Goldman and BlackRock as Europe has cooperation agreements with US regulators, so managers could handle European clients’ accounts from there until ESMA and the FCA have theirs.

“By pulling the UK out of Europe, there’s potentially a regulatory hole because the UK doesn’t have a cooperation and information sharing agreement with each EU country,” said Neil Robson, regulatory partner at law firm Katten Muchin Rosenman.

An ESMA spokesman said it expects to have agreements in place before the end of March. If not, BlackRock will move around 10 equity portfolio managers to New York, one source said, adding they would later move to the eurozone.

Goldman’s asset management business GSAM, with 50 managers in London, has plans to send “a handful” to the US financial capital until a framework is in place, the second source said, adding they too would eventually relocate to the eurozone.

Reuters

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