Alternative Investment Fund Managers Directive Update

 Six months after the U.K. voted to quit the European Union, there's increasing uncertainty about the impact on the hedge fund industry.

The British government has yet to trigger Article 50, which will set a two-year clock for U.K. institutions to disentangle themselves from the E.U. It's still unclear what that will entail for U.K.-based hedge fund operators, as well as non-U.K. man­agers with operations in London. U.K.'s Brexit czar, David Davis, suggested on Dec. 1 that Britain would consider making pay­ments to the E.U. to ensure continued access for U.K. business­es — similar to arrangements Israel, Norway and Switzerland have with the union.

If the U.K. were to lose such access, hedge fund managers could be cut off from investors on the Continent. To maintain their marketing "passports" under the E.U.'s Alternative Invest­ment Fund Managers Directive, U.K. fund operators would have to establish investment-management or risk-manage­ment operations in other