BREXIT perspectives: financial market dynamics, welfare aspects and problems from slower growth (original) (raw)
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Brexit and the implications for financial services
Chapters in SUERF Studies, 2017
On 23rd February 2017, SUERF and EY organized a conference on “Brexit and the Implications for Financial Services” at EY’s offices, Churchill Place, Canary Wharf, London. While the outcome of the Brexit negotiations remains highly uncertain, the conference discussed the burning questions for financial firms, markets and regulators with a range of different viewpoints expressed on a number of important themes: the systemic risks from Brexit; the possible role of equivalence versus passporting to continue to facilitate cross-European financial transactions; the effects on the deep wholesale markets located in London and the question as to whether the sheer size and interconnectedness of London as a financial center implied that it would still act as a magnet for European business; the effects on Europe if the result created fragmentation of markets and CCPs; and the implications for bank, insurer and asset manager business models, in particular whether Brexit would act as a catalyst f...
The effects of Brexit on the UK capital markets
Pressacademia, 2021
Purpose-This study attempts to identify the consequences that had the BREXIT referendum over the United Kingdom's Capital Markets. By reviewing the available studies done until now on this topic and the financial literature about the constant changes over the market we will try to analyze the impacts of the British Citizens' decision to leave the European Union on the capital market during the transition period. Methodology-We estimate the UK policy uncertainty in front of such a problematic situation, and the results of such uncertainty about BREXIT in interaction with the volatilities caused in the financial markets by taking into consideration the pre and after BREXIT period, by analyzing data sets based on the statistics released by financial institutions to check the changes on levels and values of the Stock Exchange. Our main focus is on analyzing the volatility and market changes as a result of unexpected and new ongoing events. Hence we study the values of Abnormal Returns and their relevant statistical information derived from the political situation and policy uncertainties in the country.. Findings-An event study with 30 event windows for a portfolio of average abnormal returns of the top 10 selected constituents of the FTSE100 has been applied by using the GARCH model to measure the volatility. The shocking results of the referendum have affected negatively in the UK's stock exchange market, providing a high scale of volatility meaning that the market is beyond the normality levels where high risk is present. We notice that the larger influence of new announcements is set to be observed during the period of 5 trading days before and on the event day, while in the following 5 trading days after the announcement has been made the effect on volatility tends to diminish. Conclusion-In general, it has been found that Brexit has created negative consequences over the market throughout our examination period.
Brexit and the European financial system: mapping markets, players and jobs
2017
textabstractBrexit will lead to a partial migration of financial firms from London to the EU27. This Policy Contribution provides a comparison between London and four major cities that will host most of the new EU27 wholesale market: Frankfurt, Paris, Dublin and Amsterdam. It gives a detailed picture of the wholesale markets, the largest players in these markets and the underlying clearing infrastructure. It also provides data on professional services and innovation.
Financial Services and Brexit: Navigating Towards Future Market Access (pre-copyedit version)
European Business Organization Law Review, 2018
This article focuses on the consequences Brexit will have for cross-border financial services between the EU and the UK after a possible transition period. In light of the uncertain results of Brexit negotiations, we analyse the future regulatory framework for commercial banking and clearing services in two scenarios. In the first scenario, the EU and the UK do not agree on a free trade agreement (FTA) so that market access will depend on unilateral market access provisions (no deal scenario). This would probably cause serious market disruptions because financial services providers on both sides would lose their privileged passporting rights and be treated as third country providers. In order to avoid this, the EU and the UK can enter an FTA (deal scenario). As to this second scenario, the article discusses five models for an FTA regarding financial services ranging from no access to full access and corresponding to divergent degrees of regulatory alignment. The analysis of both scenarios considers the boundaries set by the GATS on an international level. With regard to a possible FTA granting mutual market access for financial services, we develop a margin for modelling an FTA between the legal limitations of the GATS and the legal-political limitations of the EU-EEA market integration.
European Capital Markets Union Post-Brexit
This paper covers four main areas: the motivation for capital markets union (CMU) and the expected benefits for the functioning of the European economy and financial system; the road map for its implementation and the obstacles and challenges the CMU project is facing in view of the Brexit vote; the role of the European Securities and Markets Authority versus national supervisors; and the steps taken so far in implementing the European Commission’s action plan aimed at identifying and removing obstacles to cross-border capital markets transactions, as well as the policy priorities and the sequencing of reforms given the complexity of the task ahead. The paper concludes that Brexit clearly represents a setback, as the United Kingdom has by far the deepest and most liquid capital markets in the European Union, but it also provides an opportunity to launch a more ambitious CMU agenda encompassing the remaining 27 EU members.
Financial Services and Brexit: Navigating towards Future Market Access
European Business Organization Law Review, 2018
This article focuses on the consequences Brexit will have for cross-border financial services between the EU and the UK after a possible transition period. In light of the uncertain results of Brexit negotiations, we analyse the future regulatory framework for commercial banking and clearing services in two scenarios. In the first scenario, the EU and the UK do not agree on a free trade agreement (FTA) so that market access will depend on unilateral market access provisions (no deal scenario). This would probably cause serious market disruptions because financial services providers on both sides would lose their privileged passporting rights and be treated as third country providers. In order to avoid this, the EU and the UK can enter an FTA (deal scenario). As to this second scenario, the article discusses five models for an FTA regarding financial services ranging from no access to full access and corresponding to divergent degrees of regulatory alignment. The analysis of both scenarios considers the boundaries set by the GATS on an international level. With regard to a possible FTA granting mutual market access for financial services, we develop a margin for modelling an FTA between the legal limitations of the GATS and the legal-political limitations of the EU-EEA market integration.
THE ANALYSIS OF THE EFFECT OF POST -BRE-EXIT IN EUROPEAN FINANCIAL MARKET
Dissertation on THE ANALYSIS OF THE EFFECT OF POST -BRE-EXIT IN EUROPEAN FINANCIAL MARKET, 2021
ABSTRACT On June 23, 2016, the United Kingdom held a referendum on its membership in the European Union, at first glance, there was a sense of uncertainty in relation to the future relationship between these two parties as a transition period was agreed to ensure proper negotiation is held for safe landing. This negotiation was necessary as it was believed that this famous divorce between one of the worlds’ most influential and powerful nations and the European Union who in its own is a powerful institution will have adverse effects on both parties. During the course of this research study, the researcher administered closed ended questionnaires to experts and academics in the field related to the research topic and findings were different from the documentary review. The opinions of the experts and academics sampled showed that the extent of the negative impact on the economy of the UK and its affairs as well as the economy of the European Union financial market, however, the final agreement between both parties gave birth to the Trade and Cooperation Agreement. This agreement made allowances that benefited both parties as it made some allowances on affairs such as aviation, road transport, fisheries, security and thematic cooperation and union programmes as well as other agreements. There is also an agreement that the Trade and Cooperation Agreement open to other agreement between both parties overtime which is different from those in them. It is certain that with time the United Kingdom will suffer in some ways as regards its withdrawal from the European Union but it should also be noted that even though the United Kingdom will be moving away from close integration and cooperation with its nearest neighbours, it give her the full opportunity to negotiate trade deals directly with non-EU countries. The Pearson Chi-Square row in predicts that since the p-value 3.7% is less than the alpha value 5%, this means the result is statistically significant and then the alternative hypothesis which states that ‘are effects of Post-Brexit on the European Union financial market’ should be accepted and the null hypothesis should be rejected and that there is a 64.1% effect of Post-Brexit on the European Financial Market which is average. It is recommended that even though it seems like the impact of Brexit on the UK economy looks bleak on the long run, it is important for the government to not lose sight of the various opportunities which comes with Brexit both domestically and in the international market as it give the United Kingdom the opportunity to build on its existing world leading approach in innovation. Overtime, with the right steps taken as regards treaties with various non EU members, the United Kingdom might place herself at the apex in the world financial sector.
2017
Financial services constitute an important net export for the UK economy, for which the rest of the EU is the largest market. This paper considers the likely consequences of Brexit for this sector. A 'soft' Brexit, whereby the UK leaves the EU but remains in the single market, would be a lower-risk option for the City than other Brexit options, because it would enable financial services firms to continue to rely on regulatory passporting rights. Under a 'hard' Brexit scenario, where the UK leaves the single market, the UK might in principle be able to benefit from the EU's third country 'equivalence' frameworks for financial services, but these are cumbrous and incomplete alternatives to passporting. UK firms would find it considerably more costly to export to the EU. This would also be a loss to the EU27, because the UK specializes in capital markets services for which the EU, overreliant on banking, recognizes a need. However, much of this 'UK' activity is provided by subsidiaries of US-headquartered groups. In the event of hard Brexit, these firms may be able to compete just as effectively from New York as from London. If soft Brexit proves politically impossible, it seems highly desirable that the UK push for a transition period of continued EU membership pending at the very least completion of equivalence determinations and, more usefully, the conclusion of a suitable bilateral agreement.
Brexit and European Financial System
Globalization and Business, 2017
London is Europe’s financial centre, providing corporate and investment banking services to the European Union’s 28 member countries and beyond. When the United Kingdom leaves the EU and its single market by the spring of 2019, UK-based financial firms will lose their passport to do direct business with EU27 clients. Brexit thus leads to a partial migration of financial firms from London to the EU27 (EU minus the UK) so that they could continue to serve their customers there. We provide a comparison between london and four major cities that together will host most of the new EU27 wholesale market: Frankfurt, Paris, Dublin and Amsterdam.We also give a detailed picture of the wholesale markets(foreign exchange, securities and derivatives trading), the largest players in these markets (the major banks) and the underlying clearing infrastructure. London is an international financial centre, serving European and global clients. A hard brexit would lead to a partial migration of financial...
Did Brexit change the behaviour of the UK’s financial markets?
Journal of Economics and Political Economy, 2019
Abstract. The recent UK referendum results and subsequent initiation of Article 50 in the 2007 Lisbon Treaty set in motion the UK’s withdrawal from the European Union, acknowledge as Brexit. The result and subsequent action were unprecedented and for many unforeseeable. Apart from the political instability and division of the country, the complicated and long process of Brexit have both economic and financial consequences. With this in mind, we analyse the impact of Brexit on four main British financial markets: Equity, Foreign Exchange, Gold and Sovereign Debt; using daily data. We extendthe variance bound test proposed by Fakhry & Richter (2018) underpinned by an asymmetrical C-GARCH-m model of volatility. Unlike many in the past, we placed the emphasis on the stable markets; thus introducing the stable marketpre-condition hypothesis. We analyse the long and short run effects of Brexit on the stability of the UK’s financial market. Our results hint at a certain impact on the UK’s ...