London Brokers' Brexit preparation


July 20, AtoZForex Almost a month has passed since the UK decided to leave the Eurozone on 23rd of June. Nevertheless, the consequences are still coming in, as the global economic and financial markets are affected. London Brokers' Brexit preparation process has started with firms debating whether to move their operating away from the UK.

London Brokers' Brexit preparation

Following on this, City of London’s brokers are influenced the most and they are ready to meet the turmoil with the brave face. Currency, bond and equity trading venues took the biggest hit by Brexit. They are currently discussing if they need to move some, or all, of their operations to other European countries in order to retain the access to EU’s single market.

Starting with the MarketAxess, which is a US-owned bond trading place, the team of five people is working on the implications of the Brexit vote. They are screening for the opportunities to open their office in Europe and would like to establish it outside the UK. The Chief Executive, Rick McVey, anticipates that the UK will reflect the regulatory framework with the EU. Also, it would work hard to retain the London financial center status. He also comments:

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A move to Europe “is not a big disruption for us and we’re prepared to do that. It’s more of a problem for the banks — it’s a regulatory burden. Fragmentation is good for us. If trading gets dispersed, expect the market volumes to go up.”

Furthermore, some of the companies say they will be establishing the regulatory and legal presence in the Eurozone even before the formal UK leave. One example of these companies is the Bats Europe, the largest stock exchange in the region.

The Chief Executive at TulletPrebon interdealer broker, John Phizackerley, reacted to UK decision to leave the EU by sending the memo to staff. The memo stated that there were unlikely to be any sudden implications for “the organization, the regulatory environment, the location of our global HQ or for where our employees are based”.

Some of the companies are keeping their operations in the UK

Some of the companies decide to keep the majority of their operations in London, saying that the corporate holdings are usually complex. For example, ICAP, with its headquarters based in London, says that its fixed income platform, BrokerTec, is based in the US. Additionally, their currency trading venue is based in Switzerland.

BNY Mellon, an American bank with more than $29 trillion value of the assets, states that it has adaptability due to its multi-bank model. The head of investment services for the region in BNY Mellon, Hani Kablawi, says:

“We have material and broad-based entities. For example, we have an EU-based bank in Brussels, with a branch structure across Europe.”

As London Brokers' Brexit preparation continues, another interdealer broker, BGS Partners, has decided to buy the UK’s Sunrise Brokers to improve its exotic equity derivatives business. The President of BGC, Shaun Lynn, commented:

“As far as we’re concerned, Brexit is good for the interdealer broking industry as it leads to volatility.”

Additionally, in the period of the last year the London Stock Exchange became a more desirable destination for global debt issuance. What is more, last week the first offshore Masala bond by an Indian corporation was listed on the LSE. Moreover, some of the first Indian and Chinese exchange – traded fund issuers have appeared.

See also: Post Turkey Coup: TrioMarkets TRY risk management measures

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