AFME: Brexit isn’t top of the agenda
30 May 2018 London
Image: Shutterstock
Brexit isn’t top of the agenda for firm’s in the financial services industry, according to a panellist at this year’s Association for Financial Markets in Europe (AFME) conference.
Speaking on Brexit as a priority, the panellist said: “We struggle with whether we should put Brexit on the agenda and we really haven't as we have other priorities, there just isn’t the meat to sink your teeth into in Brexit really. The key thing is that we have close communication with our clients.”
Discussing the implications of Brexit, in particular, the best and worst case scenarios for the buy side and custodians, the panellist added: “The problem is that so little is known about the transition. At the moment custodians are effectively dealing with client needs, it has been, in a way, relatively easy.”
Another speaker suggested that the key to Brexit is having “close communication with our clients”.
However, one panellist explained: “We had to consider a worse case scenario—loss of the ability to sell UCITS funds. The merger happened, and for a number of reasons we built up an existing base in Luxembourg. And in Ireland, where we already had a presence already, we decided to make that second Markets in Financial Instruments Directive (MiFID II) entity. Those steps started to be put into place quite early on, and doing anything like that is quite a big undertaking.”
The panellist added: “If you were a purely domestic player then you might have made different decisions. It really depends on your business, what your size is and how long it is going to take. We don’t know what the in-landscape is going to look like and there are lots of other things to consider.”
The panel also discussed sell-side firms, with one panellist saying that there is much discussion over how projects are run for sell-side firms.
The panel was then asked how they found working with partners in the market and where communication could be improved.
To this question, one panellist said: “There was not a broad sharing of information until very recently, one of the reasons for this is because everyone knows humans will be impacted — we wouldn't want rumours to spread around and the panic that comes with that, that was done behind closed doors.”
Continuing on this point, the panellist said: “If you look into asset management industry it is a question of competition. For example, how much of your future strategy are you willing to share?”
He added: “More and more people and institutions are publishing their plans. Everyone is trying now to figure out what the other side is planning. That is the tricky aspect of Brexit, as it throws up into the air the entire infrastructure that we have so far.”
The attention then shifted to how much time businesses will spend trying to figure Brexit out, one panellist pointed out that it is important to be reactive.
One speaker went on to say: “After the initial shock of the Brexit referendum, it was business as usual because nothing is changing. It could be a couple of years before this becomes legislation.”
“It is quite hard to be technical and have an eye on what is happening because all around aspects are changing. We need to keep an eye on what is happening in European regulation. It is incredibly draining. A lot of the changes will be commercial rather than regulatory. You have to be reactive to so many things.”
Closing the panel on a positive note, the moderator asked panellists to name one opportunity that the Brexit process may bring to them.
For one panellist, an increase in their UK office’s staff numbers was seen as an opportunity.
Another panellist commented that there is an opportunity to establish presences in different jurisdictions.
And, another speaker said that Brexit may pose more competition in terms of regulation.
They added: “The UK will have its own regime and so an aspect of making it attractive and safe for investors, might be a point that has a higher standard in future.”
Speaking on Brexit as a priority, the panellist said: “We struggle with whether we should put Brexit on the agenda and we really haven't as we have other priorities, there just isn’t the meat to sink your teeth into in Brexit really. The key thing is that we have close communication with our clients.”
Discussing the implications of Brexit, in particular, the best and worst case scenarios for the buy side and custodians, the panellist added: “The problem is that so little is known about the transition. At the moment custodians are effectively dealing with client needs, it has been, in a way, relatively easy.”
Another speaker suggested that the key to Brexit is having “close communication with our clients”.
However, one panellist explained: “We had to consider a worse case scenario—loss of the ability to sell UCITS funds. The merger happened, and for a number of reasons we built up an existing base in Luxembourg. And in Ireland, where we already had a presence already, we decided to make that second Markets in Financial Instruments Directive (MiFID II) entity. Those steps started to be put into place quite early on, and doing anything like that is quite a big undertaking.”
The panellist added: “If you were a purely domestic player then you might have made different decisions. It really depends on your business, what your size is and how long it is going to take. We don’t know what the in-landscape is going to look like and there are lots of other things to consider.”
The panel also discussed sell-side firms, with one panellist saying that there is much discussion over how projects are run for sell-side firms.
The panel was then asked how they found working with partners in the market and where communication could be improved.
To this question, one panellist said: “There was not a broad sharing of information until very recently, one of the reasons for this is because everyone knows humans will be impacted — we wouldn't want rumours to spread around and the panic that comes with that, that was done behind closed doors.”
Continuing on this point, the panellist said: “If you look into asset management industry it is a question of competition. For example, how much of your future strategy are you willing to share?”
He added: “More and more people and institutions are publishing their plans. Everyone is trying now to figure out what the other side is planning. That is the tricky aspect of Brexit, as it throws up into the air the entire infrastructure that we have so far.”
The attention then shifted to how much time businesses will spend trying to figure Brexit out, one panellist pointed out that it is important to be reactive.
One speaker went on to say: “After the initial shock of the Brexit referendum, it was business as usual because nothing is changing. It could be a couple of years before this becomes legislation.”
“It is quite hard to be technical and have an eye on what is happening because all around aspects are changing. We need to keep an eye on what is happening in European regulation. It is incredibly draining. A lot of the changes will be commercial rather than regulatory. You have to be reactive to so many things.”
Closing the panel on a positive note, the moderator asked panellists to name one opportunity that the Brexit process may bring to them.
For one panellist, an increase in their UK office’s staff numbers was seen as an opportunity.
Another panellist commented that there is an opportunity to establish presences in different jurisdictions.
And, another speaker said that Brexit may pose more competition in terms of regulation.
They added: “The UK will have its own regime and so an aspect of making it attractive and safe for investors, might be a point that has a higher standard in future.”
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