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Brexit, Mifid

Brexit views

It is now more than two weeks since the UK voted to leave the European Union. Since then there has been a great deal of commentary, some of which applies to energy and commodity trading. Since 24th June, the FCA have not made further public announcements adding to their steer to “keep going” with MiFID II. However, given the desire to keep the “passport”, it is likely that the UK will seek to keep most EU legislation.

This article on the Reuters web site looks at the possible impact on the position limits rules. With the UK in another jurisdiction, non connected contracts could theoretically be subject to different limits and possibly rules. This may work to the benefit of certain venues.This is of course subject to any passporting negotiations during which the UK may commit to maintaining existing rules.

This post on LinkedIn from David Hirst of ARC reminds that as a G20 country, the UK is committed in principle to many of the concepts found in EMIR and MiFID, and also argues that it is unlikely that the UK rules will deviate from the EU’s ones too much over the coming years. It is recommended that UK market participants take an active part in the UK drafting process once it starts.

This note from Bird and Bird argues that REMIT will likely remain close to the current rules, although it also argues that other parts of UK legislation may eventually diverge.This article from Shepherd and Wedderburn look at the energy market in general.

Finally, the discussion on whether the UK would be permitted to continue to clear Euro demonstrated activity, is brewing(for example see here on Depending on the outcome, this may well have a significant impact on the structure of the European markets.

Overall, the steer from many is therefore to “keep calm and carry on”, until more is known, coupled with some high level scenario planning. It would appear however that the best case scenario for many is that nothing gets more complex than it is now.


About avivhandler

Aviv is the Managing Director of ETR Advisory, a niche consultancy focused on the regulation of the commodity, energy and financial markets. He has more than 23 years of experience in the financial, energy and commodity markets, covering regulatory compliance, credit, risk and financial technology. Prior to founding ETR, he was Partner at SunGard Global Services, where he built a Centre of Excellence in European Energy and Commodity Regulation. Before that, he founded Coherence, a consulting firm specializing in credit risk in commodity and energy trading as well as software product management. The credit practice ultimately became part of Sirius Solutions, where he was the Managing Director of Europe. He has also held management roles at KWI and Iris Financial, among other organizations. Mr. Handler holds a degree in computer science from Imperial College, University of London.


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