Changes in delegation could lead to increased costs for investors and retaliation from other domiciles.

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EU funds routinely delegate portfolio management to hubs including New York, Tokyo and Hong Kong.

The regulator recommended changes in 19 areas including harmonizing the AIFMD and UCITS regimes.

Most funds are managed cross-border using passporting rights.

KPMG is researching how the alternative fund regulation has worked in practice.

The majority of hedge funds are set up in Bermuda and the Cayman Islands

The Ucits passport across the European Union is regulated at the fund, rather than the manager, level

Fund managers will still need separate regulatory approval for distribution in each EU member state.