London FX firms needing EMIR and MiFID reporting post-Brexit? Easy! We talk to regulatory reporting specialist Nicholas Roussos
“It remains to be seen how the post-Brexit drama will unfold. The UK government should find a way to preserve EU single market access for the financial industry. If it does not, I can understand why a company such as LMAX would seek to register in Ireland” – Nicholas Roussos, Business Analysis Consultant, Cappitech.
In a recent report by FinanceFeeds, it has become apparent that a small number of British FX companies with interests in the institutional and retail sector have begun to look toward establishing satellite operations in specific countries which are member states of the European Union in order that they may continue to provide services under the MiFID and EMIR rules which pertain to the European Union member states.
With regard to European Union single market equivalance in the post-Brexit period, LMAX has planned to put operations in Ireland should the British government not reach a satisfactory single market agreement with the European Commission, and will apply for its additional license in Ireland in January 2017 should it consider such a move necessary.
It is a commonly held belief that there is no hierarchy of highly experienced industry professionals in Ireland. There is no infrastructure. It is still an agrarian country with a few new apartment and office complexes that spent a long period of time uninhabited, a reminder to allcomers of the unemployment rate which rose to 15.1% in 2012.
London by comparison is quite the opposite.
LMAX, in its rationale for considering adopting Irish regulation, does indeed highlight this matter quite accurately.
The company quite correctly states that the UK is the world’s FX center, twice the size of the US market, and accounts for over 40% of the $5 trillion per day global FX industry.
LMAX considers the United Kingdom to be the backbone of global trade, which is quite correct indeed, however the firm believes that that the FX market in London depends on regulatory equivalence with the EU.
Ireland may well be a no man’s land in terms of productivity and even less of a home to global electronic financial services firms, however even Ireland has more relevance than other EU nations such as France, Italy, Spain, Portugal, Belgium – a country in which all OTC derivatives are banned – and even, believe it or not, Germany.
It is indeed a matter of studying the global landscape of the electronic financial markets business in order to be able to gain a key understanding as to why Britain, with its captial city being the largest and most important financial center on earth, would even bother entertaining the thought of setting up any European operations when Australia, North America and the Asia Pacific regions are much more aligned partners with much better markets and technology.
If companies wish to look closely at regulation, however, and base a small operation in Europe in order to maintain an EU-aligned MiFID and EMIR presence, a different perspective can be placed on why certain parts of mainland europe are irrelevant altogether.
Indeed, Britain would be well served by striking cross-border agreements with ASIC and other important regulators instead however for those insistent on having a European presence, FinanceFeeds took a close look at what the implications are with Nicholas Roussos, Business Analysis Consultant at regulatory technology firm Cappitech.
“Ireland or Cyprus are both healthy choices for Financial Services UK firms seeking to relocate post-Brexit” he said.
“It remains to be seen how the post-Brexit drama will unfold. The UK government should find a way to preserve EU single market access for the financial industry. If it does not, I can understand why a company such as LMAX would seek to register in Ireland” explained Mr. Roussos.
With regard to support from the government, Mr. Roussos explained “The Irish government has taken steps to promote their International Financial Services Industry, (see www.finance.gov.ie/IFS2020) and they have a deep, educated talent pool. Also as an added bonus is the close proximity between Dublin and London for business trips.”
“Another alternative to Ireland is Cyprus, which has done well to establish itself as a hub for the Retail FX industry. A company seeking to register in Cyprus will enjoy EU single market access, low corporate taxes, and a competent and experienced national conduct authority in CySEC” – Nicholas Roussos, Business Analysis Consultant, Cappitech
“Clients using our regulatory reporting service have operations in Israel, Cyprus and the UK. Our team is located in both Cyprus and Israel” he continued.
“From Cappitechs perspective, we are confident in our ability to service our clients regardless of where in the EU a UK based firm decides to relocate. That is the great part about technology, its borderless” said Mr. Roussos.