As of the 31st January, the United Kingdom has officially left the European Union, undoubtedly a historic date to be referenced in the unseen future. Investors, investment firms, and brokers alike have all been biting their nails in anticipation of what’s to come. The biggest question being the state of affairs of the firms licensed by either UK or EU financial overseers.
The UK is currently in its 11-month transitional period, which will continue until December 31st, indicating that firms will have to wait another 11 months for clear answers.
For now, the Withdrawal Agreement is in operation, and with it EU laws continue to apply in the UK, at least until the 31st December. There are no foreseeable changes during the transitional period. as of yet- current affairs will function as they always have. Yet, the electricity in the air is felt, and many are worried that the EU and UK will not reach an agreement by 2021, putting the Forex sector in an uncertain position.
It is crucial to note that, deal or no deal, the UK will most definitely leave the EU structures and institutions, including the European court of justice, the data sharing agreement which is imperative for any brokerage firm, and a plethora of other accords.
One of the most posed question is whether brokers will be affected by the inevitable changes in the European Market Infrastructure Regulation (EMIR) and Markets in Financial Instruments Regulation (MiFIR). For now, nothing is set in stone, and only time will tell, putting many companies on the edge of their corporate chairs.
Nevertheless, the fact of the matter is that UK brokers and investors will inevitably have to report to UK-only regulators, while EU clients and companies will have to rely on EU-based TRs and ARMs, until the FCA and EMIR/MiFIR decide on a consensus, or figure out a unique compromise which will not be in direct violation of any EU laws.