#PlanB Accessing the European market Brexit from an infrastructure provider perspective London. 12 June 2018

Transcription

1 #PlanB Accessing the European market Brexit from an infrastructure provider perspective London 12 June 2018

2 1 The EU and the UK are strongly interlinked THE EU IS THE UK S MAJOR TRADE PARTNER In 2016, the UK covered approximately 51 % of the imports from the EU % of British exports (goods and services) went in 2016 to the EU. 3 From the EU view, trade with the UK in 2015 turns off just 16 % of the EU-good exports. Vice versa the EU imported 240 milliard pounds in UK goods in The UK gained 16 % of the complete EU GDP in DEMOGRAPHY In 2015, 3.2 million people living in the UK were citizens of another EU country. 1 Around 1.2 million British live in the EU27 in British- European relations in numbers EU AND UK FINANCIAL MARKETS ARE STRONGLY INTERLINKED The UK financial market acts as a wholesale hub for other EU financial centres and accounts for up to 80 % of EU activity in financial market segments According to the FESE European Equity Market Report 2016 around 54 % of the European equity trading was executed in UK. The UK handles 77 % of euro-denominated derivatives transactions, according to the Bank for International Settlements data on over-the-counter trades. Around 78 % of European FX trading, 74 % of European interest rate derivatives trading and 50 % of European fund management activities (by assets) take place in the UK.

3 2 Agenda 1 Current status of the Brexit process 2 Potential impact on financial markets 3 Deutsche Börse Group in the Brexit landscape 4 Brexit information 5 Outlook

4 3 Countdown to Brexit Time remaining = less than 1 year 3 Last feasible date for a draft Brexit deal October 2018 TODAY 12 June 2018 Negotiations 19 June 2017 October 2018 Vote on Brexit deal at: - European Parliament - UK Parliament - EU27 Parliaments end 2018 early 2019 Ratification October March 2019? Unconfirmed transitional period 29 March December Jan 2018 Apr July Oct Jan 29 Mar Dec 2020

5 4 Even with an agreement on the withdrawal issues, the outcome of the negotiations is still uncertain Theresa May, Prime Minister of the United Kingdom David Davis, Secretary of State for Exiting the EU We have the chance, now, to create a new dynamic in the talks to work together to explore workable solutions - in Northern Ireland, in our future security cooperation and in order to ensure the future prosperity of all our people. 1 [22 March 2018] There should be very little difference between the standards and regulations in the U.K. and the EU immediately after Brexit. 4 [26 January 2018] Nothing is agreed until everything is agreed. 2 [10 April 2018] "Companies are well advised to prepare for the worst-case scenario as well ( ) there is no guarantee that this overall agreement will be reached, though we are working hard on it". 3 [11 June 2018] [ ] I believe Brexit is one of the saddest moments in 21st-century European history. In fact, sometimes I am even furious about it. 5 [10 April 2018] Michel Barnier, European Chief Negotiator for the United Kingdom Exiting the European Union Olaf Scholz, German Finance Minister Donald Tusk, President of the European Commission Leaving the EU single market Trading with the EU would be based on WTO 6 rules and third-country regimes. Hard Brexit Softer Brexit Keeping close ties with the EU One model of a soft Brexit could be the so-called Norway option being a member of the EEA 7 and staying in the single market. Cliff-edge Brexit http s:// 6 WTO: World Trade Organization 7 EEA: European Economic Area

6 5 Agenda 1 Current status of the Brexit process 2 Potential impact on financial markets 3 Deutsche Börse Group in the Brexit landscape 4 Brexit information 5 Outlook

7 6 Third-country rules are no substitute to the EU passport and will have a great impact financial markets Leaving the EU single market means that the UK would be considered as a third country and UK-based financial firms would lose their EU passporting rights 1. Third-country rules (TCRs) for financial services are incomplete and can be withdrawn by the EU. They do not provide appropriate substitute long-term solutions for UK-based financial firms. UK-based firms are considering to establish a subsidiary in EU27 in order to make use of the passporting rights. Even though UK s regulatory regime is currently exactly the same as EU s, there still is uncertainty as the decision to give third-country recognition is ongoing, forward-looking and will take into account the risk of larger financial activities passing out of the European supervisors direct control. Trading Venues Systematic Internalisers CCPs Trade repositories CSD services Data reporting services Prospectuses Market Infrastructures TCRs for crossborder services Banking and related services Investment services Banking services (e.g. deposit taking, lending, payment) Fund management & marketing activities of AIFMs UCITS fund management Provision of benchmarks 1 Passporting rights make it possible to conduct financial services on a cross-border basis throughout the entire EU. TCRs for crossborder services?

8 7 Agenda 1 Current status of the Brexit process 2 Potential impact on financial markets 3 Deutsche Börse Group in the Brexit landscape 4 Brexit information 5 Outlook

9 8 Deutsche Börse Group Entire value chain is affected by Brexit Cash securities, bonds and ETFs Listed derivatives OTC derivatives FX spot and derivatives Commodities Funding and financing Pre-IPO Trading OTC Listed Group Repo & Securities Lending Clearing Un-cleared N/A Cleared Cleared Repo & GC Pooling CCP SecLending CCP Un-cleared N/A Settlement and custody (Futures only) Other listed derivatives N/A via partner for OTC uncleared Externally provided Collateral management GFF Market Data + Services Others Index Services Regulatory Services Data Services Regulatory Reporting Hub Transaction cost analysis Outsourcing platform, IT services

10 9 How Deutsche Börse Group is preparing for Brexit? Brexit Readiness Project The Brexit Readiness Project was set up to ensure continued segments readiness from group level perspective for all relevant group markets and products as well as continued client access. The project s purpose is to maintain continued access to our customers currently located in the UK in a post-brexit world. Brexit Transition Team Deutsche Börse Group has set up a dedicated Brexit Transition Team to help its customers deal with the changes and uncertainty surrounding Brexit. The Transition Team analyses all aspects of Brexit, potential implications for Deutsche Börse Group s customers as well as how this will affect Deutsche Börse Group s own set up vis-à-vis its clients. Eurex Clearing partnership program Last year, Eurex Clearing introduced a partnership program to develop a EU27 based alternative for OTC Interest Rates Derivatives clearing.

11 10 Agenda 1 Current status of the Brexit process 2 Potential impact on financial markets 3 Deutsche Börse Group in the Brexit landscape 4 Brexit information 5 Outlook

12 11 Where to find Brexit information on our website On the Group s dedicated Brexit website all relevant updates are published. In the menu, you will be able to find a Brexit member readiness sub-section.

13 12 Where to find Brexit information on our website

14 13 Where to find Brexit information on our website

15 14 Where to find Brexit information on our website Brexit questionnaire A first tab provides guidelines on how to use it and fill it out. In the second tab, you will find the questionnaire: Part I Part II (optional)

16 15 Agenda 1 Current status of the Brexit process 2 Potential impact on financial markets 3 Deutsche Börse Group in the Brexit landscape 4 Brexit information 5 Outlook

17 16 Brexit makes finding a sustainable vision for EU financial markets key to ensure stability, efficiency and a level playing field EMIR Review and CCP Recovery and Resolution How to ensure supervision of systemic important infrastructures? How to ensure stable EU financial markets? Implementation of G20 Agenda MiFID Review / Recalibration CRD IV/CRR How will definition of liquid markets work with third country venues? How to ensure that EU does not end with letter box banks? and European Supervisory Authorities (ESAs) Review How to increase competitiveness of EU capital markets? Capital Markets Union (CMU) Economic and Monetary Union (EMU) True EU-27 Capital Market required No Financial Transation Tax (FTT) Favourable environment How to make EU attractive for non-eu investors and issuers? How to ensure efficient allocation of resources across EU? How to ensure fair, stable and open market access for EU27 market participants?

18 Thank you for your attention! Italo di Lorenzo Government Relations Phone: