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Markets will lose on hard Brexit? Not necessarily

Markets will lose on hard Brexit? Not necessarily

created Michał Sielski17 Września 2019

Director-General of the British regulator FCA Andrew Bailey believes that even if the turmoil with Britain's exit from the European Union ends in a "no-deal" "divorce", a so-called hard Brexit, financial markets need not lose out. Of course, if they prepare for it in advance.

Necessary dialogue with the EU

The director of FCA calls on the European Union not to block traders from using London exchanges. Important politicians of the European community have already mentioned that this may happen in the case of hard Brexit. According to Andre Bailey, this will be another blow to the UK financial markets, which can cause significant losses that will be difficult to make up for a long time.

It is worth adding that just leaving Great Britain without the contract will cause problems for listed companies. Many of them operate throughout the entire community and will have to comply with two legal orders. Moreover, some provisions will conflict with each other.

"It is easy to notice, then, that market liquidity, especially in the case of such companies, will then be destroyed without any positive effect" - says Andrew Bailey in a speech cited by major global agencies.

The head of FCA also called on the authorities of Great Britain, and above all the European Union, to focus on this problem, whose shadow is already hanging over the UK capital market, as well as on the pound itself, whose value is systematically falling. However, he claims that the organization he manages will primarily want to help companies in this difficult period for them.

"At FCA, we take a pragmatic approach to emerging problems. We will be very understanding, taking care to preserve market integrity and protect consumers and market utilization. " - says Andrew Bailey.

What problems will Brexit bring for traders?

Let's remind: Brexit was supposed to happen a few months ago. The last deadline was in March but has been postponed. However, more and more often it is said that Great Britain will leave the European Union without an agreement. Therefore, work is underway to ensure that the banking and financial system do not suffer from it. Experts argue that this is a much greater challenge than the "problem of the year 2000" still remembered by many, which was to cause failure of many computer systems, but then it ended only with fear.

What problems can arise for traders this time? The closing of futures contracts, which will start in the European Union, and their settlement will take place in a country that will be outside the community. Access to exchanges itself can also be troublesome, as well as exchanging information with a country that does not belong to the EU.

What about British Forex brokers?

Traders using British brokerage houses are sure to ask themselves this question. According to the FCA guidelines, Forex brokers serving residents of EU countries are obliged to keep their clients informed about possible risks and consequences that would occur in the event of a hard Brexit.

There is practically no problem when we run our account in a company with an additional in the EU. In this situation, having an account under British jurisdiction "Flip" trading under regulations from another community country is relatively simple and should not affect our positions in any way.

In a message sent a few days ago by one of the British brokers we read:

What will change for me in the case of a scenario without agreement?

If October 31 UK leaves the European Union without agreement, as a European customer you will be able to transfer your FCA regulated account to the CySEC regulated account in our sister unit. As part of CySEC, there will be no changes to your invoice or trading experience with us- the platform, prices, margins and leverage will remain the same as under FCA regulations and you will be able to continue to use our personalized services as our valued customer.

What happens in the case of the agreement with the agreement?

If October 31 UK leaves the EU with an agreement allowing FCA regulated companies to service European customers, you can continue trading with us using an FCA regulated account and no changes are required.

Further information will be sent to you as the Brexit date approaches. There will then be more clear information and we will then be able to provide more detailed information on how to smoothly transfer your account to continue your trading experience without interruption.

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About the Author
Michał Sielski
Professional journalist for over 20 years. He worked, among others, in Gazeta Wyborcza, recently associated with the largest regional portal - He has been present on the financial market for 18 years, he started on the Warsaw Stock Exchange when the shares of PKN Orlen and TP SA were just being introduced to the market. Recently, his investment focus has been exclusively on the Forex market. Privately, he is a parachutist, a lover of Polish mountains and a Polish karate champion.

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