State Street has said it has worked with its client M&G Investments to deal with the impact of Brexit and helped the London-based asset manager replicate its UK business in Luxembourg.
State Street said it worked with M&G prior to the UK EU referendum vote to evaluate options and offer insight on domicile-specificities, including distributing models and accounting requirements.
Following Brexit result, State Street provided cross-border back office support ahead of the launch of M&G's Luxembourg-domiciled Sicav.
State Street said that a dedicated team also worked closely with M&G to replicate its existing UK operating model and contractual arrangements for Luxembourg in an “ambitious delivery period".
"This partnership means a mature conversation with open and honest feedback," David Suetens, country head and managing director of State Street in Luxembourg. "We identified a difference between the UK and Luxembourg practices and came to a common solution, best suited to their needs."
Looking ahead to the implementation day of Article 50 on March 29, Suetens said: "We do not see any immediate impact to our operations or client servicing as a result of the triggering of Article 50."
State Street is "well positioned" to manage the potential effects of increased market volatility, according to Suetens. He said it is coordinating its staff levels to manage any increased client queries, trade volumes and fair valuations.
Brexit was one of the key 2017 concerns for UK asset managers, according to a CBI/PwC Financial Services survey in January, in addition to macroeconomic uncertainty and cyber-security threats.
"As the UK begins its negotiations to leave the European Union, asset managers are aware their interaction with regulators will increase," said Mark Pugh, asset and wealth management leader at PwC. "It is vital the industry continues to work closely with both the government and the regulator to ensure all parties are aware of each other’s needs and expectations."
Despite these challenges, optimism has increased dramatically in the sector since September and expectations for growth are the strongest they have been in 18 months.
Employment numbers have improved since last quarter, with asset managers spending more on training and developing their people in response to ongoing regulatory scrutiny, including the FCA’s recent market study.
State Street announced on March 2 that it was closing down its transition management operations in London and Hong Kong at the end of the year due to a dwindling demand for the service.
Moving forward, State Street’s transition management teams in Boston, Sydney and Singapore will service trade and settle transactions, according to the firm.