The effect of Brexit on MiFID
Authored by: Silvano Stagni, Hatstand (a Synechron company)
Brexit will be a long process, and it will only start when the British Parliament invokes Article.50 of the Treaty of Lisbon; and only the Parliament can do it. They have indicated that this won't happen any time soon – announcing this week that it will be before the General Election in 2020. That action will then be followed by at least two years of negotiations, a period that could be extended by unanimous consent of all member states. At the end of the negotiations the UK leaves the EU. MiFID will start on January 3, 2018. With the earliest date the UK could leave the EU looking to potentially be 2022, UK financial institutions will still have to comply with MiFID.
The FCA recently issued a statement saying “EU derived rules? Still apply despite the Brexit vote”. Brexit may take different shapes. If the UK joins the European Economic Area (EEA), it will still be part of the Single Market in Financial Service and there will be no change in financial regulation. If the UK becomes a ‘third country’ though, MiFID or a MiFID-like set of rules will have to be in force to guarantee equivalence with the EU and to be able to sign similar equivalence arrangements between the UK and other countries.