Monday, June 24, 2024

ESMA and UK CCPs scramble as Brexit seems inevitable

Almost everybody in Europe is anticipating the coming withdrawal of the United Kingdom from the European Union. However, many don’t realize how many problems this may cause for the financial sector of the Union as many financial institutions and companies are located and regulated in the UK.

ESMA and UK CCPs are at work

The European Securities and Markets Authority (ESMA) is already working with the Central Counter party Clearings (CCPs) in the UK, in preparation of Brexit. The preparations need to be top notch as the time gap is slowly shrinking. The UK is expected to leave the EU in March 2019, leaving the two parties with only 4 months to prepare for both scenarios.

By both scenarios, we mean Hard and Soft Brexit, which include various restrictions and tie-cutoffs with the financial markets located in the EU and the UK. The worst case scenario would be hard Brexit as many traders will find themselves floating around, trying to find a reliable Forex broker.

Unfortunately, however, even if Soft Brexit will be the case ESMA will have to deal with the migration of thousands of its traders to offshore brokerages as many of its new regulations were met with protests from the trader’s side. The EU financial authority is seeking to ban trader benefits like bonus promotions and high leverage trading. Things that some traders cannot afford to part with.

Loopholes for traders

However, there are exceptions in this policy, something that can unite UK and EU traders on a single platform. The XM Deposit bonus promotion here details the availability to nearly all markets regardless of the laws, thanks to the broker’s multiple regulations around the world.

But even brokers like XM need to prepare for the onslaught of the Brexit outcome as nothing is yet quite clear. The only thing known about the preparations is the fact that the European Commission will adopt measures if Hard Brexit will be the case. The measure being a no disruption policy to the central clearing.

Although there is still hope for traders as the UK is still debating whether or not to truly walk out the door of the EU. Voter sentiment is slowly changing and it is affecting the MPs as well. The question remains, however, will the EU keep them?

Claire James
Claire James
Claire is an accounts manager at Fire Digital UK, an online publishing and content marketing company based in the North West.

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