The new era of delegate oversight


The new era of delegate oversight

Executive Summary

On 13 July 2017, the ESMA published an opinion on delegation by EU authorized entities to asset management companies located outside of their homeland, and more precisely in non-EU jurisdictions, in the context of Brexit. This opinion covers several aspects of the delegation process from policies and procedures around delegation to delegation oversight, governance, and substance, and some aspects of the investment process and risk management. Our focus here will be on the first two topics: policies and procedures relating to delegation and delegation oversight. While the opinion has been published in the context of Brexit, the underlying idea could most probably become an industry standard aiming at enhancing requirements around delegation and oversight. The ESMA describes this opinion as establishing the minimum standard required in the context of delegation and has repeatedly stated that existing regulations already stipulate that oversight must be organized. The difference is that now minimum requirements have been clearly defined and is the ESMA has expressly specified that these rules apply to white-label entities (also known as thirdparty management companies) as well as entities that belong to a corporate group. The most interesting change is that the requirements are now clearly expressed in writing and in fact, are mostly repeated several times. It is also worth underscoring the fact that these requirements are seen as minimums. In other words, every authorized entity is expected to fulfil the delegation requirements detailed hereafter, but larger entities, and most probably newer ones, may be asked to go further.

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Performance magazine issue 26, May 2018

Performance is a triannual digest, dedicated to investment management professionals, which brings you the latest articles, news and market developments from Deloitte’s professionals and clients.

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