As we reported in early July, pan European regulator ESMA issued a warning to licensed financial institutions both inside the UK and elsewhere in Europe that they should prepare themselves for the (likely?) possibility of a Hard Brexit come March. As Brexit terms have not yet been agreed upon between UK and EU representative negotiators, it is certainly possible that in March – just seven months away – MiFID passporting between the UK and EU will end. If so, any UK firm will need to either let go of its EU clients (and vice versa), or shift them to an EU subsidiary separately licensed somewhere in the EU.
[U]Here’s a link to the Finance Magnates article --[/U]
Interesting that it should be the “Cyprus Regulator” who apparently raised this issue, when CySEC itself is widely regarded as a somewhat second rate “Regulator”
This has an odour of Politically motivated pressure to me.
Perhaps “they” have an inkling that the UK Regulators who are widely regarded as “First class” may diverge in their Regulations away from the Draconian “EU directives” and allow a more realistic leverage requirement ?
Personally, I’m curious to see what will happen to all the UK traders that will be left without a broker once the Brexit happens.
From a marketing/business point of view it’s a great opportunity for non-UK brokers to position themselves in order to pull in as many traders as possible.
In the statement, ESMA clarified that once Britain leaves the bloc on March 30, 2019, firms must have a fully authorised legal entity in one of the EU 27 countries if they want to continue to provide services within the EU.
Or will we see a rush to outsource offices in countries like Cyprus, Romania and Bulgaria to be able to stay in business and keep their clients?
In light of the recent CySEC actions - I feel like they are making an effort.
That’s the popular description yes. But I am starting to disagree with that sentiment. That after a quite extensive due diligence on CySEC and its model and processes. Yes there is the fact that they offer a lower protection limit, 20000 Euros vs. 50000 GBP. But the real likelyhood of claiming anything from this pool is not that big. For the vast majority of retail traders it will have no real impact. It’s more a sales pitch really. Now, what could have impact on retail traders with smaller accounts is the ombudsman process. The UK have what seems like an excellent, and fair, ombudsman service. It is highly transparent and professional. Cyprus also have a well functioning Ombudsman that works on the same principles but their processes and legislative foundation seems somewhat different and more “cumbersome”. At least that’s my findings so far. I am still looking into it. For everything else, including funds protection, CySEC offer identical protection via a broker with propper EU passports as any FCA UK broker with ditto EU passports.
So, we are in 2018 and my assessment, as it stands today, is that there isn’t a big practical difference between CySEC and FCA for EU/EEC based retail traders. They both offer reasonable protection imho. With a slight edge to FCA. Digg beyond the popular opinion and the story is often another.
EU* I meant EU
If you’re an EU trader trading on with a UK broker and that broker does not open a EU office they’ll have to show you to the door, or am I misunderstanding it?
Maybe we’ll see some growth in Cyprus offices and an influx to them once the Brexit is done? This might actually be a good thing as it will force cysec the get their things in order even faster.
The European Securities and Markets Authority’s (ESMA) temporary intervention measures … will become part of UK domestic law in case of a hard Brexit on the day the country leaves the EU.
