Jurisdictional arbitrage vs market efficiency: Who controls investment funds in the EU?
Krzysztof Adam GÓRSKI1
Artykuł w czasopiśmie
Słowa kluczowe: delegation arrangements; investment funds; collective investment schemes, UCITS; AIFMD; risk management; jurisdictional arbitrage; prudential requirements; European Union law; capital markets law
Streszczenie This article offers a broad theory on delegation arrangements existing between investment funds and third-party professional service providers under the European Union law. Limited delegation of portfolio management and risk management functions generally leads to an increase in operational efficiency of investment funds. Delegation results in obtaining external expertise, research and access to infrastructure without the need for the management company to develop it internally. However, the legislative frameworks in question impose restrictions on such delegation arrangements as the latter pose challenges from the perspective of prudential obligations derived from authorisation. This is especially evident in the case of delegation to not-licensed entities or those based outside of the European Union. This article discusses the legal framework for such arrangements in five parts. The first one consists of a general introduction to the topic. The second presents the legal framework applicable to investment funds in the European Union. The third part defines delegation arrangements, explains the rules applicable thereto and discusses their limitations. The fourth part focuses on the concept of supervision and its limitations in reference to implemented delegation arrangements. Finally, the last part concludes the discussion with a statement that the lack of harmonised rules on delegation increases market inefficiencies and legal uncertainty.
College of Law, Kozminski University