Liquidnet: Two-thirds of asset management firms planning for hard Brexit
20 August 2018 London
Image: Shutterstock
Some 83 percent of firms have a theoretical plan to respond to Brexit, but only 49 percent of firms have put their plan into action, according to a study conducted by Liquidnet.
A further 31 percent have plans under review, with 17 percent still unsure what to do, waiting to pull the trigger once the political situation becomes clearer.
Rebecca Healey, head of Europe, Middle East and Africa for market structure and strategy at Liquidnet, who published the study said: “Despite the fervour and noise, and irrespective of the final political outcome, firms with clients or brokers in Europe are being advised to take action now.”
She added: “The risk of not being able to trade and transact on 30 March 2019 is too great, given that, at the current juncture, a no-deal outcome is looking increasingly likely.”
The study found 59 percent are already working towards a hard Brexit, rather than wait for potential political solutions which have no guarantee of emerging.
Of these, 55 percent believe Brexit will be softer than currently anticipated, but given the political uncertainties, firms are left with no other choice but to implement hard Brexit plans.
Some 87 percent are planning to keep trading desks where they are. However, this may be temporary with only half anticipating that change may be required depending on the outcome of delegation.
A third are keeping a watchful eye on the potential fragmentation of liquidity; but just 17 percent are ready to move today should the need arise.
A further 63 percent believe there will be no additional costs incurred in execution as a result of Brexit—despite a third anticipating a split in liquidity formation.
Half of the respondents are reviewing their settlements options. Only a third feel comfortable that no change is required.
Three quarters expect the UK to retain financial services post Brexit due to a mix of liquidity access, staffing talent and ease of access.
Frankfurt is anticipated to emerge as the European beneficiary of Brexit—but this is also dependent on the business type, with Dublin and Luxembourg emerging as winners for asset management services, and Amsterdam as the main location for trading venues.
Regardless of Brexit, firms expect the second Markets in Financial Instruments Directive regulatory change to continue, with 42 percent believing that the outcome will negatively impact both sides of the channel.
Fifty-five investment management firms were contacted during the period April to August 2018 for the study, to understand the impact of Brexit on their organisation and their operational structures.
Participants included both asset managers and hedge funds, with 45 percent headquartered in the UK, 34 percent in Europe and 21 percent in the US.
A further 31 percent have plans under review, with 17 percent still unsure what to do, waiting to pull the trigger once the political situation becomes clearer.
Rebecca Healey, head of Europe, Middle East and Africa for market structure and strategy at Liquidnet, who published the study said: “Despite the fervour and noise, and irrespective of the final political outcome, firms with clients or brokers in Europe are being advised to take action now.”
She added: “The risk of not being able to trade and transact on 30 March 2019 is too great, given that, at the current juncture, a no-deal outcome is looking increasingly likely.”
The study found 59 percent are already working towards a hard Brexit, rather than wait for potential political solutions which have no guarantee of emerging.
Of these, 55 percent believe Brexit will be softer than currently anticipated, but given the political uncertainties, firms are left with no other choice but to implement hard Brexit plans.
Some 87 percent are planning to keep trading desks where they are. However, this may be temporary with only half anticipating that change may be required depending on the outcome of delegation.
A third are keeping a watchful eye on the potential fragmentation of liquidity; but just 17 percent are ready to move today should the need arise.
A further 63 percent believe there will be no additional costs incurred in execution as a result of Brexit—despite a third anticipating a split in liquidity formation.
Half of the respondents are reviewing their settlements options. Only a third feel comfortable that no change is required.
Three quarters expect the UK to retain financial services post Brexit due to a mix of liquidity access, staffing talent and ease of access.
Frankfurt is anticipated to emerge as the European beneficiary of Brexit—but this is also dependent on the business type, with Dublin and Luxembourg emerging as winners for asset management services, and Amsterdam as the main location for trading venues.
Regardless of Brexit, firms expect the second Markets in Financial Instruments Directive regulatory change to continue, with 42 percent believing that the outcome will negatively impact both sides of the channel.
Fifty-five investment management firms were contacted during the period April to August 2018 for the study, to understand the impact of Brexit on their organisation and their operational structures.
Participants included both asset managers and hedge funds, with 45 percent headquartered in the UK, 34 percent in Europe and 21 percent in the US.
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