Protecting investors remains “our paramount objective, no matter the outcome of Brexit”, said a European Securities and Markets Authority (ESMA) representative at this years’ FIX Trading Community EMEA Trading Conference.
The representative said ESMA is monitoring all associated risks of a no-deal Brexit scenario, the day after the UK Parliament voted a no-deal Brexit should not go ahead.
She emphasised that, although monitoring all risks was in hand, ESMA “can only do so much”.
She said: “Ultimately, every one of us [in the financial industry] needs to look specifically at their own situations and process preparations for all scenarios. The UK’s decision to leave the EU will move Europe’s biggest capital market outside the EU, we are all required to prepare possible scenarios.”
She stated: “Now is a challenging and unprecedented time in European history. In the next few days and later this week, we will have some more clarity and hopefully know the type of Brexit we will have and when it will happen.”
The representative added that Brexit will impact specific areas of the Markets in Financial Instruments Directive and that trading observations for derivatives should be of concern.
She advised firms to “work on preparing pre- and post-trade transparency data, double volume caps and obligations for derivatives on legal entity identifier regimes”.
She further indicated central clearing as the area within the securities market that has “the highest risk of stability in the case of a no-deal”.
To this, she alluded to the importance and affirmation of ESMA’s partnership with the Bank of England, signed in January, that promises to recognise central counterparties and central securities depository established in the UK, should there be a no-deal Brexit scenario.
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