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Deutsche Börse statement on the UK’s triggering of Article 50

29 Mar 2017

Deutsche Börse statement on the UK’s triggering of Article 50

The UK has officially triggered the EU withdrawal process on 29 March 2017. The two-year period during which the EU and the UK will negotiate the terms of Brexit has started.

It is expected that the negotiations between the UK and the EU will be challenging. EU law will continue to apply in the UK during the negotiation period, but uncertainty for market participants will continue until the terms of the UK’s withdrawal (including any transitional arrangements) are agreed.

We will strongly support our clients throughout the transition process

Deutsche Börse Group is closely monitoring and analysing the Brexit process. Moreover, we are actively discussing the impact of Brexit with our clients, and are involved in industry association discussions. It is in the Group’s primary interest to ensure that our UK-based clients maintain access to our infrastructure. We are therefore committed to maintaining our UK market access post Brexit, while supporting clients who seek to relocate their business to the EU.

Legal uncertainties through loss of EU passporting rights

EU and UK financial markets are strongly interlinked. The UK financial market currently acts as a wholesale hub for other EU financial centres and accounts for almost 80 per cent of EU activity in financial market segments1).

UK-based financial firms will lose their existing EU passporting rights to conduct business with EU 27-based clients if no transitional provisions or treaties are agreed between the UK and the EU that would maintain these rights.

Third-country rules incorporated in EU financial regulations (e.g. MiFID II/MiFIR, EMIR, CSDR) are designed to provide access for non-EU firms to EU financial markets. However, third-country rules are not an exact substitute to the EU passport because:

  • they do not cover the entire suite of financial services, and
  • underlying equivalency decisions by the European Securities and Markets Authority (ESMA) or the EU Commission can be withdrawn at very short notice.

Moreover, some influential EU representatives (from the European Central Bank, European Parliament and ESMA) have expressed opinions that third-country rules were not designed to cope with systematically important volumes.

It is important that Europe remains competitive internationally while upholding financial stability. Therefore, deregulation (“race to the bottom”) and regulatory arbitrage (“cherry picking”) must be avoided.


1) According to the FESE European Equity Market Report 2016 around 54 per cent of European equity trading was executed in the UK. The UK handles 77 per cent of euro-denominated derivatives transactions, according to the Bank for International Settlements’ data on over-the-counter trades. Around 78 per cent of European foreign-exchange trading, 74 per cent of European interest rate derivatives trading and 50 per cent of European fund management activities (by assets) take place in the UK.

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