CM18: Brexit concerns remain
12 October 2018 Amsterdam
Image: Shutterstock
Brexit concerns remain as panellists discussed what the impact of Brexit would have on the collateral market at this year’s Annual Collateral Management Forum in Amsterdam.
One panellist said: “As the March deadline of next year looms, Brexit still lies among a lot of negotiation, we don’t know what Brexit is going to look like, it could have any kind of impact on the market, but what about the collateral market?”
Another explained: “From a counterparts perspective if your counterparty is located in the UK you need to repaper your documents towards a European entity to be able to move from one jurisdiction to another.”
But he added: “There is significant risk related to that especially if it is located in the UK, it could be quite a hostile environment after Brexit.”
An audience member also stated that this description of a hostile environment was also a concern when considering central counterparties (CCPs).
He said: “I work for a vendor, but Brexit could mean certain businesses having to initiate a CCP in mainland Europe and possibly a CCP in the UK also” of which he indicated “means two quotes from brokers—meaning more complexity and more cost”.
But the panellist also said the “impact could be overestimated at the moment. It could remain just political. We’ll know by March, but firms should prepare for any outcome”.
One panellist said: “As the March deadline of next year looms, Brexit still lies among a lot of negotiation, we don’t know what Brexit is going to look like, it could have any kind of impact on the market, but what about the collateral market?”
Another explained: “From a counterparts perspective if your counterparty is located in the UK you need to repaper your documents towards a European entity to be able to move from one jurisdiction to another.”
But he added: “There is significant risk related to that especially if it is located in the UK, it could be quite a hostile environment after Brexit.”
An audience member also stated that this description of a hostile environment was also a concern when considering central counterparties (CCPs).
He said: “I work for a vendor, but Brexit could mean certain businesses having to initiate a CCP in mainland Europe and possibly a CCP in the UK also” of which he indicated “means two quotes from brokers—meaning more complexity and more cost”.
But the panellist also said the “impact could be overestimated at the moment. It could remain just political. We’ll know by March, but firms should prepare for any outcome”.
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