About a-team Marketing Services
The knowledge platform for the financial technology industry
The knowledge platform for the financial technology industry

A-Team Insight Blogs

Financial Institutions Regroup to Consider Outcomes of Brexit

Subscribe to our newsletter

After the shock of last week’s ‘leave’ vote in the European Union referendum and a weekend to reflect on the outcome, financial institutions across the UK are considering big picture scenarios that could result from Brexit and putting together governance frameworks designed to help them manage events as they unfold.

While there is no certainty on exactly when and how the UK will exit the EU, there is certainty that both UK and European financial regulations will endure until negotiations are complete either within or outside the two-year time window provided by Article 50 of the Lisbon Treaty.

Among key EU regulations that are already in place and must be sustained are the Alternative Investment Fund Management Directive (AIFMD), which aims to create a level playing field for the operation of alternative investment funds in Europe, Solvency II, which is designed to promote harmonisation of European insurance regulation, and European Markets Infrastructure Regulation (EMIR). Looking ahead, Markets in Financial Instruments Directive II (MiFID II), which will transform trading and transparency across European financial markets, is scheduled to take effect in January 2018.

While Brexit could ostensibly release UK firms from the requirements of these regulations, the UK will need to put regulation of a similar standard in place if and when arrangements are made to continue trading with EU countries.

Clearly, the long term impact of the decision to leave the EU on the overall UK regulatory framework will depend on the relationship the UK makes with the EU in future. The worst case scenario with the biggest impact will be the withdrawal of UK access to the single market and the end of the financial passport system, making the UK subject to the same rules of trading with the EU as countries such as the US, Canada and Singapore. The only let out here, perhaps, will be to set up a trading vehicle in one of the remaining 27 EU countries as a means to trade in the single market.

Whatever the outcome of Brexit, the cost of regulatory change across UK financial markets will be high, with think-tank JWG recently suggesting it could run to £17 billion over 10 years. Meantime, and despite the years of uncertainty Brexit is likely to cause, financial institutions are working to regain a sense of normality and a return to business as usual.

Subscribe to our newsletter

Related content

WEBINAR

Recorded Webinar: Managing Off-Channel Communications Compliance

Managing off-channel communications – business interactions occurring outside of approved corporate systems – continues to challenge firms’ compliance efforts. The rise of personal messaging apps, social media, and other unmonitored channels – for example, messaging functionality embedded in an order management system – exposes firms to substantial regulatory risk. Enforcement actions by regulatory bodies, such...

BLOG

Businesses Struggling with ESG Data that will Aid SFDR Compliance

Most businesses are struggling to prepare their data to meet a new European regulation that is designed in part to deliver huge troves of corporate ESG information into financial institutions’ systems. More than four-fifths of companies questioned in a study by data mastering company Semarchy said they lack confidence in their data management capabilities to...

EVENT

Data Management Summit London

Now in its 16th year, the Data Management Summit (DMS) in London brings together the European capital markets enterprise data management community, to explore how data strategy is evolving to drive business outcomes and speed to market in changing times.

GUIDE

AI in Capital Markets: Practical Insight for a Transforming Industry – Free Handbook

AI is no longer on the horizon – it’s embedded in the infrastructure of modern capital markets. But separating real impact from inflated promises requires a grounded, practical understanding. The AI in Capital Markets Handbook 2025 provides exactly that. Designed for data-driven professionals across the trade life-cycle, compliance, infrastructure, and strategy, this handbook goes beyond...