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Brexit

Brexit update: Recent developments

While the mainstream news is primarily focused on the political side of Brexit (for example, see here on the BBC New web site), there have been a few developments that are relevant for the energy and commodity trading sector.

Over the past days, the UK’s Financial Conduct Authority (FCA) has announced here that firms are expected to be ready for a “no deal” Brexit. In addition, the Chief Executive, Andrew Bailey has given this speech. In it, he explains the possible issues that would arise in the event of a no deal Brexit, if the EU does not grant equivalent status to UK venues.

The European Commission has also issued an update on the final preparations for a no deal Brexit here. It outlines certain provisions such as temporary recognition of CCPs and other measures.

This article on the Reuters web site reports that EPEX Spot have expressed the view that the liquidity of the GB spot power market will decease by 10-20% in the event of a no-deal Brexit. This article on the Bloomberg Quint web site reports predictions that the Irish ISEM (Integrated Single Electricity Market) is in danger of breaking up in the event of a no deal Brexit. According to the article it would not likely break up immediately, but possibly in the months following.

For now, most are preparing as much as possible. However, it will be necessary to keep a close eye on political developments in order to understand the likelihood of each scenario.

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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