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Steve Grob

Fidessa Fragmentation Index

Steve Grob - Fidessa

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Brexit blues

22 February 2016  |  5642 views  |  1

Interesting to read over the weekend that London's mayor Boris Johnson has decided to throw his charismatic and not inconsiderable weight behind the "NO" campaign. Most agree that this shifts the possibility of a Brexit from remote to now distinctly possible. I wonder, therefore, what this means for all the rules we are in the midst of implementing as part of MiFID, EMIR etc. Theoretically none of these rules would necessarily apply, which would leave the UK potentially in a bit of a mess. Of course other European countries such as Switzerland and Norway, that are not part of the EU, mirror the MiFID rules as this makes interaction with their trading partners easier. But they are not forced to, and equally don't have anything like the trading activity that happens here in the City on London. So it would be up to UK regulators to decide if, how and when they implement the rules coming out of Brussels. This might create the temptation to re-examine some of the more controversial aspects, such as the dark pool trading caps or payment for research. Would this in turn lead to a rethink in Europe so that it doesn't fall victim to regulatory arbitrage? Or would we end up with the kind of interminable mutual reciprocity dialogues as we have between the CFTC in the US and ESMA here?

I guess the point is that whether the UK likes it or not, and whatever the rules, it is intrinsically part of Europe. However onerous some of those rules are, creating and playing by different ones will only make things more complicated and increase the frictional cost of trading. 

TagsTrade executionRisk & regulationBrexit

Comments: (1)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 23 February, 2016, 13:07

Maybe it's only me but shouldn't regulatory arbitrage be accepted - if not welcomed - as a natural consequence of Brexit? After all, elimination of regulatory arbitrage is one of the founding goals of any economic union.

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job title Director of Group Strategy
location London
member since 2009
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I am responsible for strategic development at Fidessa. This includes the development of new geographic markets and strategic partnerships and driving new industry initiatives. As part of this I head u...

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