IRISH UCITS ETF and end of transition period

point5clue

Hi All,
I have been lazy over the years, and much of my bond allocation comes from Lifestrategy 20.  I have been thinking about transferring that money to VGOV, but I have had a search and can't find anything definitive that says an Irish ETF will not be disrupted for a UK based investor.  The latest statement I can find on the Vanguard UK web site seem to say 'its OK - we have a transition period'... https://www.vanguardinvestor.co.uk/articles/latest-thoughts/markets-economy/vanguard-update-on-brexit

Are we still waiting to find out if it is covered in a deal/no-deal-but-we've-agreed-this-bit etc ?  Given the news about Europe based brits banks accounts closing, I would have thought we'd have heard by now if something this major was at risk, but just want to be sure...

Polite request (that will probably be ignored) - can we stick to the 'Savings and Investments' topic on this one for obvious reasons...

bowlhead99

point5clue said:

Hi All,
I have been lazy over the years, and much of my bond allocation comes from Lifestrategy 20.  I have been thinking about transferring that money to VGOV, but I have had a search and can't find anything definitive that says an Irish ETF will not be disrupted for a UK based investor.  The latest statement I can find on the Vanguard UK web site seem to say 'its OK - we have a transition period'... https://www.vanguardinvestor.co.uk/articles/latest-thoughts/markets-economy/vanguard-update-on-brexit

Are we still waiting to find out if it is covered in a deal/no-deal-but-we've-agreed-this-bit etc ?  Given the news about Europe based brits banks accounts closing, I would have thought we'd have heard by now if something this major was at risk, but just want to be sure...

Polite request (that will probably be ignored) - can we stick to the 'Savings and Investments' topic on this one for obvious reasons...

Some backstory:
A 'passporting regime' exists within the EU where (broadly speaking) an investment firm can offer services, and an investment fund can be marketed, in another EU state - as long as they are regulated and authorised in their home country.

Ahead of our end-of-2019 exit, the FCA put in place a 'temporary permissions regime' where EU manager firms and funds could simply notify the FCA that they wanted to carry on serving UK customers in the event of a hard Brexit, and the UK would effectively extend their passport for up to three years, during which they would be allocated a 'landing slot' to do a full application for UK permissions to operate or market here. The idea being that if passporting no longer technically worked (because UK had become ex-EU without a deal or transition arrangement), the FCA would still let the firms and funds market here because they do know and trust the EU regulations will be similar to what we would put in place for ourselves, and good enough.

Then when we 'left' at the end of January 2020, it turned out there was a transition period after all, until end of 2020 - during which passporting still works and UK is still fully integrated with EU -  so Vanguard were able to post that 'business as usual' message you linked, and the UK deferred its TPR / TMPR because it wasn't needed.

Now as we approach the end of transition, without knowing whether there will be a special financial services 'deal' put in place, the FCA has reopened the window for firms to update their notifications for the 'temporary permissions regime' for fund managers and temporary marketing permissions for funds, where those firms or funds had previously not been directly authorised or registered with FCA and were relying on a passport

It's inconceivable that a bigger ETF house such as Vanguard, if relying only passporting and not direct approval, wouldn't have bothered to tell the FCA that they would like their UK Gilts UCITS ETF (and the other ETF sub-funds of the Irish entity Vanguard Funds plc) to still be allowed to be marketed to UK customers in the event of 'no deal' at the end of the transition window in December.  And if you look at the current prospectus for VGOV it does say that Vanguard Funds plc is registered as a UK recognised scheme for purposes of FSMA.

So, I wouldn't see any issues with you having access to the product in the New Year. They're not planning to delist it from the London stock exchange (or they would have announced that), and they aren't planning on letting it become inaccessible to UK retail investors - as they mentioned in the last update which you linked, "There will be no changes to the way either your account with us or your funds are managed. At Vanguard we have kept the Brexit process under close scrutiny. This will continue as long as necessary and we will take care to ensure that you have timely information as required."

point5clue

Thanks Bowlhead