How soft has Brexit become?

Keep your sunny side up while the vicar’s daughter tackles the curate’s egg

How much softer is the B word these days? The answer is a little…but beware politicians bearing gifts, especially when the lawmakers need to make matters binding and workable.

Yes, prima facie this week’s news on the transition providing an additional 21 month breathing space to the end of 2020 is positive. Indeed, just as the extension of the MiFID II deadline by a year meant that markets had realistic prospects of compliance (and the jury is still out on how successful that has been), the complexity and scale of the need to build and relocate significant trading operations means that for many, 2020 is now an achievable target.

Even so, certain aspects of Brexit programmes need to remain at full throttle with regulatory engagement being an absolute priority: the deadline for obtaining licences remains June 2018 and both future operating model definition and external venue assessment remain similarly crucial. We are also wary about what equivalence really covers, so watch this space for further thoughts on where the gaps may be.

Critically, the legal uncertainty remains. While the Bank of England has been slightly more sanguine, following this week’s announcement the Bundesbank has recommended that banks continue to plan for March 2019.

How best to proceed? Our advice to clients is to

  • keep momentum on your Brexit programme;
  • focus on the time-consuming and complex matters;
  • continue to apply conservative assumptions.

That soft-boiled Brexit egg may well be harder than you had hoped.

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