Brexit: Democracy and a thriving electronic trading business among London’s finest, or a spanner in the works? Op Ed

The result of a referendum on European Union membership cannot be overturned. Or can it? What would happen within London’s financial sector if the execution of Article 50 is blocked and democratic process receives a poke in the eye? As the High Court continues to hear absurdities as to why it should not be invoked, we take a look at the potential consequences and the signs that the electorate and London’s business leaders are a true voice of reason.

London, Canary Wharf from Thames

Once the votes were cast and the British electorate made its overall standpoint very clear in that an exit from the European Union and an independent future for Britain was the favor of the majority, all of the anticipation subsided and business leaders and City executives in London looked ahead toward a conservative, business friendly Britain, safe in the knowledge that once the result had been made clear, there would be a clear plan ahead.

…or would there?

Almost six months later, incumbent Prime Minister Theresa May is, instead of forging ahead and invoking Article 50 of the Lisbon Treaty which allows any European Member State to withdraw from the European Union in accordance with its own constitutional requirements, the British government is still listening to the European Commission’s lobbyists and individuals launching campaigns and litigation in order to attempt to halt democratic process.

In November this year, despite referendum procedure being that a majority public vote absolutely holds and cannot be overturned, several left-wing figures with deep pockets began to engage in more than just the usual loud noise which is the general preserve of unaccountable art and philosophy students whose diet includes mung beans and South African peace wine instead of a good entrecote steak, and whose economic and commercial contribution amounts to absolutely nothing.

The first of the champagne socialists with enough resources to head a campaign that has been taken somewhat seriously was 51 year old Gina Miller, a senior lawyer at British law firm Mischon de Raya, who, along with her husband Alan who founded fund management company SCM Direct.

Gina Miller has made a name for herself fighting against the legitimacy of Britain leaving the European Union, arguing that the the British government did not have constitutional authority to trigger Article 50 without the tick of approval from Parliament and MPs. Indeed it is always the case that in the wake of a substantial geopolitical event there are those who approve and there are dissenters, however the mere circumstance that, following a fair and square Brexit referendum vote, these are being even considered, is somewhat unusual.

The main considerations with regard to the financial and electronic trading sector are that the delaying of the activation of Article 50 and the potential that it could be stopped by arbitrary individuals rather than proceedings according to democratic process being adhered to may be key to the business direction that London’s institutions should be able to take.

This falls into two categories, the first being Britain’s vast publicly listed FX and CFD firms which are among the very largest and most highly respected in the world.

Yesterday, it was made clear that Britain’s government is listening closely to the financial services sector’s Brexit concerns, finance minister Philip Hammond and David Davis, minister in charge of the process for the country’s exit from the European Union both concurred.

“We want the best deal for trade in UK goods and services, including our world-leading financial services industry,” Mssrs Hammond and Davis said in a joint statement after meeting finance executives on Monday.

Why? Mainland Europe is steeped in debt, has very low productivity and no financial markets economy to speak of, with very old technology and infrastructure.

Conversely, London is the world’s fiscal and FinTech powerhouse. Its FX and CFD firms produce their own proprietary trading technology, and the market connectivity to Tier 1 banks is all the preserve of the Square Mile, with Britain’s retail giants providing their services to a predominantly British and very loyal base of traders.

0.009% of the workforce of the entire European Union are employed in the City of London’s financial sector, yet London’s Square Mile produces 16% of all tax receipts for the entire continent. If that is not productivity from an epicenter of astute business ethic and leading edge financial markets activity feeding an entire continent that does very little, then who knows what is!

“That is why these meetings, where we listen closely to the sector’s views on the potential impact and opportunities offered by us leaving the EU, are so important” said Mssrs Hammond & Davis.

Really? What are these meetings, and which civil servant on an endless EU payroll based in a country with no financial markets economy really understands what business can be conducted between Britain and the EU, which is rife with corruption and waste compared to Britain’s highly well organized structure.

Equinix, the de facto hosting company used by the financial services industry has servers in New York, Tokyo, Hong Kong and London – not in France or Italy.

During the course of this year, former Conservative Party Treasurer Peter Cruddas, who is the founder and current CEO of 27-year established publicly listed British electronic trading giant CMC Markets has expressed his interest in supporting an independent Britain and began to demonstrate his opinion toward this by way of regular commentary on mainstream news channels, and a £1 million donation to Vote Leave, a pro-Brexit campaign.

He is also a founder of The City for Britain, which is a pro-Brexit group made up of executives from the banking and financial services sector in London.

The founders of The City For Britain who represent the group alongside Mr. Cruddas are very prominent financial industry figures and Conservative political giants, namely Helena Morrissey, mother of 9 and who currently holds the position of Chair of the Investment Association and is the former CEO of Newton Investment Management, a company with £51 billion in assets under management, along with ex-Conservative Party Chancellor of the Exchequer Norman Lamont, who was incumbent during the leadership of Margaret Thatcher.

The astonishing aspect of all of this is that despite a clear cut referendum, the potential exit and the delays surrounding the execution of Article 50 which have been caused by inept leadership that does not carry out its responsibilities according to the vote of the people, instead listening to left-wing dissenters with little respect for democracy attempting to overturn the process, have culminated in a hearing at the High Court.

Whilst the Queens Counsel wrangle this out, it is possible that if the Brexit is thwarted, or delayed significantly, an effect on business may emerge.

Electronic trading firms in an independent UK would be free to conduct business with North America, Australian, Chinese and Singaporean partners – all of tremendous value and have remarkable business alignment, with British companies having had established institutional presence in all of those vital financial and technological regions for many years. Adhering to Brussels bureaucracy would potentially put paid to this.

Tier 1 banks, six of which operate from London and handle over 49% of all global interbank FX order flow between them, would be subject to restricting their business to Europe and paying astronomical corporation tax to support the abyss on the other side of the English Channel.

Similarly, it is too easy to consider the difference in currency values that ensued from the result of the referendum on face value and to look at the superficial soundbites that dominate mainstream market analyses that assess vanilla currency values without looking at what is actually behind these movements.

Taking a close look beneath the surface reveals a totally different set of circumstances and shows why the Pound is heading for a massive long term rise, and will be the best of the lot by far.

Confidence in British business is high – stock in FTSE 100 listed companies has not reached such lofty heights since 1986, this being an indication of the confidence that investors (some of which are majority shareholders) have in British business once the nation is freed from the unproductive burden of sponsoring the European Union to the tune of several billion per year, and being exposed to European Central Bank debt created by its policy of handing out free money to bankrupt countries over and over again and selling its debt back to the taxpayer numerous times.

With a giant dependent such as the European Union back on the scene, investor confidence may wane as firms in the UK would be subject to burdens. QED.

 

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