Brexit: You cannot predict. But you can prepare.
After the UK’s historic vote to leave the EU, UK investment firms face unprecedented uncertainty over the UK’s future access to the single market and the true economic consequences of Brexit in the long run. This has taken its toll on confidence in the City and contingency planning has emerged as a top priority for financial institutions. The need to maintain equivalent regulatory standards in order to access European capital markets after Brexit means little will change for UK institutions with respect to EU regulation and international standards, including the new MiFID II transaction reporting requirements coming into effect from January 2018. The prospect of prolonged economic uncertainty during a lengthy period of complex UK-EU exit negotiations ahead, however, adds a layer of complexity to firms’ operations in the UK, raising the bar for compliance readiness, operational flexibility, technology risk management and strategic cost control.
The UK government has announced that it will begin the formal EU exit process by triggering Article 50 of the Lisbon Treaty, by the end of March 2017. This implies that the UK’s membership of the EU will likely cease in Q1 2019. The government’s negotiation strategy over the next two years will determine what form Brexit and a future UK-EU relationship eventually take. This will have significant consequences for the UK’s economy and financial infrastructure.