European Union (EU) authorities are looking to change rules that may result in Brexit financial industry impacts for international banks. As a result, the financial rulebook known as MiFID II could be up for amendments that would negatively impact the United Kingdom (UK).
What is MiFID II?
MiFID II is reform legislation governing the financial industry. It came into being following the 2007-8 financial crisis. The EU’s purpose with MiFID II was to regulate financial markets in the trading bloc, and enhance protections for investors, thus restoring confidence.
MiFID II includes policies governing the following:
- Commodities Trading
- Derivatives Trading
- Futures Trading
- Record Keeping
- Research Spending
- Stock Trading
What Would Brexit Financial Industry Impacts Mean for International Banks?
Several Brexit financial industry impacts would alter how international banks interact with the EU and the UK. These impacts include:
- Financial services firms based in London must depend on an equivalence process to gain access to the EU
- The equivalence process will require the UK to prove to the EU that its rules post-Brexit are at least as strong as the EU’s
- The EU could unilaterally decide to exclude UK firms
- Equivalence process allows the EU to unilaterally change the requirements for equivalence
Should the EU choose to amend the MiFID II or alter the equivalence process, these changes will affect industry transactions. International banks with locations in the UK will face Brexit financial industry impacts that might:
- Halt adoption of open access, a provision meant to increase the competition in derivatives markets
- Remove the requirement that money managers pay separately for investment research and trading services
- Prevent large financial firms from providing research at low prices considered harmful to competitors
What Does This Mean?
Brexit financial industry impacts may be more far-reaching than initially thought. Since London is currently the largest financial market in Europe, other market areas in the EU may look to alter rules to help them gain business and increase their industry presence. As a result, financial services firms in the UK may soon face significant hurdles with respect to transactions in the EU.
What should Employers do About the Brexit Financial Industry impacts?
Employers in the UK should review their preparations for various Brexit scenarios that may arise in the negotiation phase. The Brexit Bill does not include all of the specific provisions that directly apply to financial industry points of concern. Issues covering these points may be determined during subsequent negotiations between the UK and the EU during 2020.
The UK has published several valuable resources with Brexit guidance for business. Companies should be sure to review the UK’s guidance to ensure they prepare accordingly. The UK has set up a portal to share information on the new rules for living, working, travelling, and doing business in the US and EU starting in January 21.
Conclusion
GMS’ team of global relocation experts has helped thousands of our clients understand how to respond to changing industry and international requirements. As a result, our team can help your company understand how various Brexit financial industry impacts may alter your need for relocating UK and EU workers.
GMS was the first relocation company to register as a .com. The company also created the first online interactive tools and calculators, and revolutionized the entire relocation industry. GMS continues to set the industry pace as the pioneer in innovation and technology solutions with its proprietary MyRelocation® technology platform.
Learn best practices from Global Mobility Solutions, the relocation industry and technology experts who are dedicated to keeping you informed and connected. Contact our experts online to determine how Brexit financial industry impacts may affect your relocation program, or give us a call at 800.617.1904 or 480.922.0700 today.
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Tamara Molino | CRP, GMS
Vice President, Global Services Tammy is responsible for GMS’ regional operations teams in North and Latin America, EMEA, and APAC. Tammy provides over 14 years of leadership experience in the areas of international assignment management, global network management, global consulting and business development. Her experience in global mobility includes new client implementations, policy and compliance development, global compensation and billing, vendor management, case management, and real estate home sale/purchase programs. Tammy travels extensively and studied abroad in Switzerland, Chile, Peru, Dubai and Abu Dhabi.
