Brexit threatens cross-border financial markets, MEP warns traders

COPYING AND DISTRIBUTING ARE PROHIBITED WITHOUT PERMISSION OF THE PUBLISHER: CHUNT@EUROMONEY.COM

By:
Joel Clark
Published on:

Global cooperation between regulators must be preserved after the UK leaves the European Union, says Kay Swinburne.

brexit-signpost-pointers-780

An influential member of the European Parliament has warned that, with a year to the day until the UK leaves the European Union, there remains a danger that Brexit could reverse the global cooperation that has been achieved during the past decade and lead back to local financial markets.

Speaking at this month’s AFME European Trading & Market Liquidity conference in London, Conservative MEP for Wales Kay Swinburne told traders it is incumbent upon market participants and trade bodies as much as regulators to protect cross-border cooperation in the wake of Brexit.

“No matter how bumpy the road ahead gets, we are going to have to rely upon the principles of trust and confidence to shape a positive agenda going forward,” says Swinburne.

“I really do fear that Brexit may end up having the opposite effect – rather than facing outwards and becoming more global, capital markets will be forced to become local once again.”

Concerns

London has long been the leading global centre for foreign-exchange trading – in the 2016 triennial survey by the Bank for International Settlements, the UK accounted for 37% of global FX trading, while the US accounted for only 20% – but legitimate concerns have been expressed that European trading will move to other centres after Brexit.

While the exact impact on FX trading cannot yet be quantified, many banks and trading platforms have begun to beef up their European operations so they can continue to compete within Europe.

Kay_Swinburne_2018-160x186

Kay Swinburne

Swinburne acknowledged that London will inevitably lose some business in the years to come, but she is confident it will remain a global capital.

“The City of London has got to continuously evolve in order that it is the best place for people to come and raise capital,” she says. “The moment we move away from being a competitive place to do business is when people will start to look for alternative centres.

“We’re always looking at where the competition is coming from and that’s why I think London will stay relevant.”

As vice-chairman of the European Parliament’s economic and monetary affairs committee, Swinburne has been involved in many of the post-crisis financial regulations that have been agreed in recent years.

In negotiating rules on central clearing, trade reporting and capital, she has been a strong advocate of cross-border cooperation and equivalence between the EU and US.

Swinburne took issue with the idea that Brexit might provide an opportunity for the UK to pedal back on notable European regulations, pointing out that UK authorities have always been stringent in implementing new rulebooks, often taking a tougher stance than the global standard – a practice known as gold plating.

“The idea that the UK would de-regulate post-Brexit is for me a major sticking point; it’s what I hear all the time across the Brussels bubble,” she says. “I genuinely believe that this narrative is completely and utterly misplaced.

“The UK has never adopted a low regulatory approach. Indeed we often gold-plate regulation that comes from Brussels and we are the driving force within EU discussions advocating for higher standards.”