22 Jan 2018

Brexit: Key cliff edge risks in wholesale financial services

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AFME has published a short paper highlighting some of the potential cliff edge risks that Brexit could create for market efficiency and financial stability.

The Brexit process is presenting businesses, investors and banks with unprecedented challenges. The time pressure on firms to prepare themselves and their clients for the UK’s exit from the EU is increasing. However, it remains unclear what kind of exit and future relationship arrangements will be agreed upon.

AFME has highlighted the need for transitional arrangements which would keep existing market arrangements in place for a limited period of time following the UK leaving the EU. This is necessary to provide certainty and stability to business and market participants as they prepare for the future arrangements that have yet to be agreed between the EU27 and the UK.
 
However, while some cliff edge risks would be mitigated (in whole or in part) by a longer transition period, risks remain that need to be addressed irrespective of a transition.

In this paper, we have therefore focused on issues which we believe require intervention from policymakers and/or regulators in the UK and EU27 and are not easily resolved by banks’ own plans or industry solutions.

We hope this paper will provide further helpful clarity for the forthcoming discussions on the future relationship between the European Union and the UK.

We would value your feedback on the report, so please let us know if you have any comments or questions.