EU Passporting post Brexit – FinanceFeeds speaks to the Conservative Party in London on the bright future ahead
In London, the world’s most sophisticated and advanced financial center, FinanceFeeds speaks to the Conservative Party’s technological advisory body, run by senior government officials, as to what is likely to happen to the MiFID passporting post Brexit, and why there will only be a positive effect
Since early year, one of the most discussed matters within the financial services industry in Britain – the largest and most important in the world – has been with regard to the regulatory framework within Europe should Britain exit the European Union.
In June, Britain’s exit from the European Union saw the shackles come off, and Britain’s ability to lead the world’s financial services business, supported by the world’s most advanced domestic financial technology, without the burden of an economically moribund, technologically backward and politically unaligned mainland Europe sucking its lifeblood.
This raised a question among many firms from Tier 1 banks, through to institutional firms, to retail brokerages – three specific industry sectors within which London dominates globally by a considerable margin.
That question was “What happens to the MiFID passporting rights if Britain leaves the EU?”
The answer to that is that absolutely nothing detrimental to Britain’s financial sector could possibly occur.
For many reasons, including that Europe has pretty much nothing to offer Britain’s commercial environment whatsoever – London’s square mile, at executive level, employs 0.00019% of Europe’s workforce yet generates 16.9% of all tax receipts for the entire European Union. You’d have to grow a lot of olives or tread a lot of grapes on the Mediterranean shorelines of Southern Europe to even hold a candle to that.
Even the British government is very much invested in Britain’s highly technological financial center, having made tremendous steps toward improving the business environment to spur innovation – something most governments are quite opposed to.
In Britain, companies can use the FCA’s regulatory sandbox to test their new technology, they can gain R&D tax credits, meaning that if they commit a certain amount of resources to R&D, they pay no corporation tax, and the Conservative government has vowed to assist the FinTech startups to prosper alongside the giant institutions and top quality infrastructure that they share a city with.
This week in London, FinanceFeeds spoke to Philip Virgo, VP Policy at the Conservative Party’s ‘Conservative Technology Forum, which is a think tank and policy advisory body that consults industry, academia and other key figures on important (often emerging) technological and societal issues and puts these into mainstream political context.
Following on from our recent research which concluded that any (albeit very small) speculation that London’s financial giants would move some of their operations to Europe in order to be included in MiFID passporting has been quashed by not only the industry giants themselves, but Moody’s which has now stated that the issue of passporting for British firms is of no consequence, the Conservative Technology Forum concurs with our line of thinking.
Noting that we highlighted a very important matter, Mr. Virgo explained to FinanceFeeds “This will be covered on the first day of the Conservative Party Conference. Until then the standard answer is “What do you want?”. Lord Hill was been working on the reform of a pan-EU financial services regime that was in serious trouble and Theresa May was responsible for EU liaison at APACS when David Davies was John Major’s Europe Minister so I will be interested to see who is appointed to handle the negotiations in this area as well as any statements and objectives.”
The Conservative Technology Forum is led by Adam Afriye, Conservative Member of Parliament for Windsor.
Mr. Afriye explained to FinanceFeeds “One of this Conservative Government’s priorities has been to foster the growth of the financial technology sector within London’s unique financial ecosystem.
“Our regulators have been quick to adapt with programmes such as the Government Office for Science’s review into distributed ledgers, the creation of the Payment Systems Regulator to review Britain’s payments infrastructure, and the Financial Conduct Authority’s creation of the ‘Regulatory sandbox’ to create a safe space to pro-actively test innovative products” – Adam Afriyie, Conservative MP for Windsor
“The EU’s stifling approach to the digital market often means that legislation is out of date before it is agreed by the 28 member states, let alone enacted. The fact that the UK is quick to adapt and cautious of over regulation will ensure that FinTech will flourish in post-Brexit Britain and it could well be the case that the EU follows our approach in future”.
A very important differentiating factor should be considered between Europe’s socialist government pen-pushers compared to Britain’s leaders.
Many senior European Commission government ministers have never worked in industry – instead they are career politicians who have risen from school to university, to lecturing, to government, as is common in many socialist strongholds. This equates to zero business acumen and a penchent for stifling innovation in the quest for milking tax revenues to fund regions of complete inactivity.
Conversely, Britain’s leaders are industry executives with business at the very forefront of their agenda, and vast experience to go with it. The Conservative Party’s former treasurer, for example, was CMC Markets founder & CEO Peter Cruddas.
Mr. Virgo has a similar commercial background, and therefore is well positioned to advise on policy with regard to the government’s approach toward furthering London’s edge. He was Program Manager and Corporate Planner at STC, ICL and Wellcome Foundation.
In terms of professional achievements, he was one of the first IT professionals sponsored to business school (London Business School 1971-3) and has since spent 40 years appraising IT developments and advising decision-takers, investors, finance directors and politicians accordingly.
His consulting via the Conservative Technology Forum and the Parliamentary Information Technology Committee began in 1981, before most nations had even used one single computer in any market, and often focuses on helping the youngsters of today to avoid repeating the mistakes of the past. He has written and blogged for Computer Weekly since 1973 when his MSc paper on “Why Computer Systems Fail” was published as a 10-part
Mr. Afriye is similarly well qualified in the commercial arena.
He is chairman of Connect Support Services, an IT support company he set up in 1993. He once owned two-thirds of DeHavilland, a political monitoring company, which was sold to British publishing giant EMAP Publications in 2005 for £18 million.
Mr. Afriyie is a stakeholder of Axonn Media, a content marketing business which produces content for clients. The company incorporates brands such as Content Plus, NewsReach, DirectNews and ReelContent. Axonn turned over £9.4m in 2011 and made a pre-tax profit of £1.3m. Afriyie is the largest shareholder of the firm and he and his fellow directors split dividends of £2.2m in 2010 and 2011 and shared directors’ pay of £3.6m over the last five years.
Indeed, with Australia, the Asia Pacific region and North America all waiting in the wings for the European restrictions on trade to be a thing of the past, the modernity of such markets and their alignment with Britain’s ultra-modern and sophisticated environment will be a catalyst for prosperity.