EU regulations put off North American fund managers

New research from Ocorian — the provider of fund administration, capital markets, corporate and fiduciary services — shows that nearly all North American fund managers currently find EU regulations complex and predict they will only find it harder to navigate those regulations over the next two years.

Many said the EU is “over-regulated to the point of being off-putting.”

Ocorian’s study with private equity, private debt, real estate, venture capital and infrastructure fund management executives in the US and Canada responsible for $1.591 trillion assets under management found that 99% of them view the current EU regulations as complex in comparison to their home jurisdictions.

About 37% said EU regulations are “extremely complex.”

About 79% of North American fund managers questioned expect the European regulatory landscape to evolve over the next two to three years, with 11% expecting a “dramatic increase.”

Just 19% believe it will stay the same.

Around 76% expect the overall level of regulation in the European fund management sector to increase over the next five years, with 10% of these predicting a significant increase.

“While almost all (99%) of the North American fund managers surveyed feel that their organisation is ‘good’ or ‘excellent’ at meeting its regulatory requirements for Europe, nine in ten (91%) say that they and their investors think the European market is already over-regulated,” said Ocorian.

“Of these, the majority (61%) say that the level of regulation is so high that it’s off-putting, both for themselves and for their investors, with the remainder (30%) agreeing there is too much regulation but it’s not causing a barrier for entry. Just 4% say it’s not over-regulated and 5% don’t know.

“Ocorian’s North American study reveals that the future looks more complicated. Over two thirds (69%) of those surveyed agree that it will become much harder for North American fund managers to navigate European regulatory complexities over the next two years, and almost one in ten (9%) of these strongly agree with this.

“A further 14% slightly disagree and 15% strongly disagree, and don’t believe this will become much harder over the next two years.

“When asked for their top three concerns when it comes to European regulation, the introduction of DORA (Digital Operational Resiliency Act on Jan 17th 2025) came out as the top and was selected by 60% of respondents.

“This was followed by increasing barriers to entry (41%) and PSD3 (Payment Service Directive). Other European regulation concerns were around new anti-money laundering regulations (31%) and a regime for artificial intelligence (28%).

“Concerns around ESG regulations were also high, with 29% citing concerns around diversity and inclusion regulations and 18% citing concerns about transparency.

“Ocorian’s study shows that these concerns about regulation are leading to a split response in whether North American fund managers choose onshore or offshore when setting up new funds in Europe. Just over half (52%) of those surveyed said they’d choose onshore when setting up a fund in Europe, compared to just under half (48%) who would choose offshore.”

Thomas Fahl, Global Head of AIFM at Ocorian, said: “Alternative fund managers in North America are generally very positive about raising capital in Europe and are keen to capitalise on the ability to open up new investment opportunities.

“However, our new research reveals that many are concerned about what they see as complex levels of regulations in Europe – both in EU regulations as a whole as well as navigating the legal and regulatory nuances between European countries.

“We feel it would be a shame that some managers are put off by the whole idea that they don’t even talk to us about the solutions we can provide and the opportunities in the market.

“We’d strongly encourage that conversation as even though regulation can be complex, with the right skill, expertise and support, fund managers can reap the benefits of Europe without falling foul of any legal or regulatory requirements.”