Buy-side most concerned Brexit will see regulatory split

A potential regulatory bifurcation is the biggest concern for asset managers following the EU referendum in the UK.

A split in regulation following the EU referendum result in the UK has been raised as the biggest concern amongst the buy-side.

A poll of 322 market participants from around the world authored by TABB Group, found 64% of the buy-side community consider regulatory bifurcation as the potential impact that concerns them most.

On European regulation MiFID II, 38% of all respondents expect a further delay to implementation, as 24% remain uncertain on the impacts.

TABB said the banker and dealer community were “somewhat more optimistic about potential delay, although they were only marginally more positive than the exchanges and vendor community.”

Proprietary traders were most pessimistic about a potential delay to MiFID II implementation, closely followed by asset managers.

ITG’s European general counsel, JP Urrutia, discussed this issue with The Trade team for our latest podcast, urging firms to act sooner, rather than later.

On the topic of MiFID II, Urrutia said firms are navigating the regulatory environment in “not just a sea, but an ocean of uncertainty.”

“An equivalence under MiFID II might be something that firms can rely on to remain in the city and continue doing business in the UK,” he said.

Although he highlighted this comes with its own troubles, as it could be withdrawn at a later stage, but it could allow businesses to “manoeuvre within regulatory framework”.

The UK’s Financial Conduct Authority (FCA) confirmed in July that European regulation - like MiFID II - still applies to financial firms across the UK, despite the results of the EU referendum.

The long-term impacts of Britain’s vote to leave the EU will depend on the decisions made by the government over the months ahead, director of strategy and competition at the FCA, Christopher Woolard explained.

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