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Brexit

Brexit

On 23 June 2016, the British population voted that the country should leave the European Union, with a small majority. On 29 March 2017, the British Prime Minister, Theresa May, notified in a letter to the European Council the United Kingdom’s intention to leave the European Union. This notification starts the official withdrawal process under Article 50 of the Treaty with a two-year period during which the EU and the UK will negotiate the terms of Brexit. Even though we very much regret this decision, we are determined to make the best of this outcome for the financial centres concerned and for Europe.

Objective

The European Union 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 % of EU activity in financial market segments1).

It is expected that the negotiations between UK and 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.

UK-based financial firms will likely 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.  

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.

Time line

On 23 June 2016, the UK voted to leave the European Union. The formal withdrawal process according to Article 50 of the Treaty on the European Union was triggered by the UK on 29 March 2017. The two-year period during which the EU and the UK will negotiate the terms of Brexit has started.

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

Brexit: the highlighted parts of the value chain are affected

Alexandra Hachmeister: Brexit negotiations are unknown territory

Alexandra Hachmeister, Chief Regulatory Officer

Following the UK general elections, the formal Brexit negotiations are to begin. Uncertainty about the final arrangements between the EU and the UK will accompany us in the months to come. Financial infrastructure providers like Deutsche Börse Group will play an important role during these times.

Results of the UK general elections

Great Britain

The British people have elected the new UK government on 8 June 2017.

The Brexit and the impact for financial markets

The Brexit process, timeline and impact – briefly explained.

European Commission takes next step in Article 50 process

Europe

The College of Commissioners sent a recommendation to the European Council to open Article 50 negotiations with the United Kingdom. It includes draft negotiating directives. This legal mandate follows the Council’s adoption of political guidelines on 29 April 2017.

European Parliament adopts resolution on Brexit

London

The European Parliament adopted its motion for resolution on Brexit with 516 votes in favour, 133 against and 50 abstentions.

Financial markets post-Brexit

Alexandra Hachmeister

Alexandra Hachmeister, Chief Regulatory Officer, about the impact of Brexit on EU passporting rights.

UK triggers Article 50

With a notification letter to the European Council on 29 March, the British Prime Minister, Theresa May, has started the official withdrawal process from the EU under Article 50 of the Treaty. Find the full wording of the letter here.

Deutsche Börse will accompany its clients throughout the Brexit process

London

We will closely monitor and analyse the Brexit process and actively discuss its impact with our clients and industry associations.

UK government published new Brexit White Paper

The UK White Paper describes the twelve principles, set out by the Prime Minister, which will guide the government in fulfilling the democratic will of the people of the UK.

"Brexit and reporting rules set to dominate 2017"

In his article, originally written for the FOW, Rory McLaren, Deutsche Börse Market Data + Services, gives a preview of 2017 and why firms will need to use the new year to ensure that they are compliant with all new reporting requirements.