Brevan Howard shifting operations to Jersey from the UK

Over the past few years many people have speculated on what the impact of AIFMD will be on the fund administration world.  Some firmly believe that it will result in an upsurge in business for EU based fund-friendly jurisdictions such as Luxembourg and Ireland, and will be a nail in the coffin of the offshore funds business.  Others argue that funds will increasingly use the offshore locations whenever possible, to avoid what is seen by some as unnecessarily onerous obligations associated with operating within the EU framework.  The truth is that no-one really knows for sure yet which way this will play out, but everyone in the industry is watching with interest.  It is therefore very interesting to note that Brevan Howard, the world’s third-largest hedge fund with some $41 billion under management, has now moved the bulk of its operations out of the UK in favour of the Channel Islands, Switzerland, Asia and the USA.

This has not happened overnight.  Alan Howard, who is a critic of the interventionist policies of the EU, moved together with a number of his firm’s key traders, to Geneva in 2010. This was followed by an initiative to internationalize the business and make it less UK centric – a decision which has led to a situation where fewer than 200 of Brevan Howard’s 450+ employees, and only a handful of traders, are now based in London, whereas only a few years ago they were all based in the capital.

Many of London’s hedge funds were critics of the AIFMD rules, but few have moved location in response, particularly after the Financial Conduct Authority made some changes to the regime in order to appease them  and to avoid an exodus.  It seems, though, that this was not enough to lure Brevan Howard back to the UK.

By 2014, it is expected that around employees will be based in Jersey, which has long been its official head-quarters but which until now had only a skeleton staff.  The Jersey team will be headed up by James Vernon, one of the co-founders of Brevan Howard, and most of the firm’s asset allocation, risk management, compliance and HR functions will be carried out in the Island. 

The other key beneficiary of Brevan Howard’s move to a less UK-centric focus has been the USA, where the firm now has 60 employees in New York and Washington.

It would certainly be rash to speculate that this is the start of a trend, but nevertheless it will come as a  welcome boost for the Jersey financial services industry, which has been seeking for some time to promote itself as a location for hedge fund business.