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#1 01-12-2019 17:25:15

johnedward
Admin & Trader
From: Paris - France
Registered: 21-12-2009
Posts: 2626
Website

Brexit is taking forever, are forex brokers going to move abroad?

Brexit is taking forever, are forex brokers going to move abroad?


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The Brexit negotiations are taking way longer than originally planned. There have been all sorts of assumptions about what might happen to the British pound, the labour market, and the UK's GDP, but the last debate to be revived is whether or not forex brokers will move to the EU. If the threat of losing EU customers becomes too great, brokers could move in the blink of an eye.

The general consensus is that no matter what happens, London will retain its title of "Financial Capital of the World", but the fear is that if both regulators are out of sync in one way or another, then as a ValueWalk expert says:

If London-based companies lose access to their EU traders, it will be a real puzzle to know who will uncover their next destination the fastest.

Recent surveys have revealed that up to 40 large banks have prepared contingency plans to quickly move their operations to cities such as Paris, Amsterdam and Frankfurt. Yes, there would be a "brain drain" and job losses, but companies would not lose their competitive position in the order of things, especially in the currency area.

If so many banks are preparing to leave the ship, why are they slow to do so? What keeps them in London and the UK? Forex brokers and institutional traders are attracted by the flexibility of the London regulatory environment and the ability to quickly adapt to change.

According to analysts at ValueWalk:

The UK is a destination of choice simply because it has the flexibility to adopt unique regulations. For example, whenever the EU makes any changes to its Financial Regulation, almost all Member States are expected to adopt these changes. Britain has been relatively free in this case because it can modify the regulatory changes according to local realities and adapt them to its investor base.

Secondly, the FCA has also worked tirelessly behind the scenes to negotiate special agreements with various EU Member States. This process has proved over time to be a much easier approach than trying to achieve an EU-wide rule change.

As long as London-based brokers can enjoy the best of both worlds, thanks in part to the efforts of the FCA, they won't want to leave. With regard to trade and trading, however, the UK and the EU may need to negotiate a single global deal if and when this Brexit mess is finally resolved.

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"Anything worth having is worth going for - all the way." - J.R. Ewing

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