The leading knowledge platform for the financial technology industry
The leading knowledge platform for the financial technology industry

A-Team Insight Blogs

JWG Calculates the Regulatory Costs of Brexit

If you are still considering which way to vote in tomorrow’s referendum on UK membership of the European Union, the regulatory implications of exiting the union may be enough to sway your decision.

Research by independent think-tank JWG suggests Brexit could mean a decade of uncertainty across markets, a significant increase in red tape and a regulatory change cost of £17 billion over the next 10 years.

Presenting at a recent FISD event, Dan Simpson, head of research at JWG, described what Brexit could mean for financial services businesses. He said rewiring EU and UK governance systems will raise a large number of known knowns, known unknowns and unknown unknowns, and noted that with G20 regulatory reform in process, Brexit will add another layer of confusion for UK businesses.

To counter these issues, business infrastructure needs to be flexible enough to go above and beyond current obligations, and heads of operations need to identify the impact of change on their infrastructure and develop rapid action plans. From an operations perspective, vast changes will be needed for everything from trader workflows and risk calculations to management controls and client and vendor agreements.

Looking at the regulatory change costs of Brexit, Simpson described three waves of change. The initial wave, from 2016 to 2019, would see UK regulators shaping new rules, while the second wave, from 2019 to 2022, would rewire EU infrastructure. The third wave, from 2022 to 2026, would rewire global infrastructure, including reconciling new rules to global standards. The expected cost of each wave of regulatory change averages at around £5 billion, suggesting a total cost in the range of £15 billion to £20 million.

Simpson concluded: “Brexit may mean that no aspect of business will be left untouched as processes, policies, operating models and business models all shift borders and boundaries under what could become the largest scale change management project ever undertaken by the UK.”

Related content

WEBINAR

Recorded Webinar: Optimising analytics – the role of data quality and data governance

Analytics are key to business decisions, revenue generation, optimal performance, risk mitigation, and more in capital markets – yet they are only as good as the data on which they are based, and that is not always very good. This webinar will consider how firms can build data quality and strong data governance as the...

BLOG

Reformis Adds Matrix IDM and NeoXam to Vendor Partner Programme

Reformis, a buy-side business transformation consultancy, continues to build out its vendor partnership programme with the addition of Matrix IDM’s cloud native data management software, and NeoXam’s Impress reporting solution. These join the company’s list of existing partners and products including IHS Markit’s EDM software, Snowflake’s cloud data platform, and Compliance Solution Strategies’ Accudelta product....

EVENT

ESG Data & Tech Summit 2022

This summit will explore challenges around assembling and evaluating ESG data for reporting and the impact of regulatory measures and industry collaboration on transparency and standardisation efforts. Expert speakers will address how the evolving market infrastructure is developing and the role of new technologies and alternative data in improving insight and filling data gaps.

GUIDE

Entity Data Management Handbook – Seventh Edition

Sourcing entity data and ensuring efficient and effective entity data management is a challenge for many financial institutions as volumes of data rise, more regulations require entity data in reporting, and the fight again financial crime is escalated by bad actors using increasingly sophisticated techniques to attack processes and systems. That said, based on best...