Over one-third of delegates that were asked at this year’s Association for Financial Markets in Europe (AFME) Legal and Compliance conference thought it would be more than likely that the UK could leave the European Union without a deal.
Of those that were asked, 31 percent thought that there would be 41 to 60 percent chance that the British Prime Minister and the rest of the Conservative Government would not gain a deal from the EU, with the Chequers deal appearing to have been cast aside in recent weeks.
The question was put to the audience in a plenary panel discussion on Brexit.
The audience was also asked whether, in five years’ time, they thought they would do more business within the EU or outside it after the Brexit implementation.
Some 42 percent predicted that their business would conduct more business outside of the EU.
Over the course of the discussion, some panellists were more sceptic than others, but most were unanimous that only so much could be foreseen until March 2019.
One concern for a panellist was the current question of central counterparties (CCPs) movement and recognition after Brexit.
A panellist said: “CCPs might end their membership [in the UK] and business might not be recreating them. The EU has to grant recognition to them.”
Another panellist was concerned that where asset management is concerned, it is important to be able to run under a global model.
He said: “Managers want the best access to the best centre of excellence” and he warned that under Brexit, “UK firms may not have this same model”.
Another panellist suggested that no matter how you well you business prepares for Brexit between now and March 2019, there are some points of business that firms simply cannot start doing on their own.
As such, another panellist mirrored that the industry as a whole needs to “monitor what is going to happen in particular within equities, derivatives and the stability of counterparties they use.
He added: “We watch this closely but we don’t know what is going to happen.”
Another panellist said on the trading venue side, there are more concerns about whether people want to work with non-EU members.
He said: “You see that around settlements, but it’s more fragmented case by case you cannot draw a straightforward answer [in the context of Brexit], if you don’t have the full package of recognition.
There was a general agreement across the panel that, as one panellist said: “a lot [of legislation for Brexit] will be shoved in to transitional period well in to 2020”, while another warned there will be a “blinder Brexit than people would like”.
Though there were some positives to note. One panellist said the “UK has shown hands-on how it plans to deal with no deal situations.”
He added that there has been “an output of many thousands of hours [of manpower] surrounding union withdrawal and I see regulatory implementation shaping.”
“The EU treating us [the UK] as a third country is pretty clear, and there have been significant accommodations to negotiate with that. I think the broad direction is clear,” he added.
From a buy-side perspective, another said that he sees enhanced equivalence moving forward. He said: “I am encouraged we [the UK and EU] are heading in right direction ending up with enhanced equivalence, hopefully, there will be more divergence where and when you serve your clients.”
He concluded: “There has been a huge movement in two years [since the referendum]. There has been an increase in cooperation agreements and MoUs from regulators. So far it is very encouraging.”
