Recurring waves of Brexit

In the face of recurring Brexit waves, the markets have become increasingly well versed in contingency planning. To navigate previous threats of a no-deal, market participants and their service providers have worked tirelessly to simplify the complex world of Brexit.

Whether it is plans for a multi-entity platform, or preparation to access new EU venues and trade reporting destinations, market participants have been busy since 2016. The overall aim is to maintain pan-European trading and continue to service clients post-Brexit.

The UK has already left the EU and in a matter of months the transition period will elapse at the end of 2020. Without equivalence recognition, we will start to see immediate tangible impact around post-trade transparency. For trade publication of off-exchange business, double printing will be making a comeback. And transaction reporting on behalf of third-country members which falls to venues to pick up the tab, will see a jump in volumes.

With last-minute changes to venue plans and launch dates expected, other 11th hour considerations are emerging. These include whether to offer cross-border assisted trade reporting and a possible introduction of new order flow data to determine party jurisdiction and share trading obligation. Should it become necessary, firms across Europe and the UK are poised to flick the unwelcome no-deal Brexit switch.

It remains impossible even at this late stage to predict the January outcome. Known unknowns include the severity of long-term effects that a no-deal Brexit tail could bring, so better be equipped to act quickly and be prepared to ride the waves.