After all the debate, no one knows how the concept of Brexit, or „Britain exits the European Union‟, will look like in practice.
The phrase “Brexit means Brexit” sounds meaningless as well, as the thought “Leave means Leave” does not help achieve the actual purpose of the referendum of June 23, 2016. What we do know is that the United Kingdom‟s (UK) separation from the European Union (EU) will completely change how we think about, legislate, and regulate affairs related to the banking industry.
The UK, and especially London, is currently Europe‟s major international financial center and leads in most of the financial services areas. The UK dominates wholesale financial services and has done so for decades. It also dominates the world‟s foreign currency trading market, a trend that accelerated initially with the creation of the EU Single Market and again with the arrival of the euro (€) in 1999. Today, the UK is by far the largest center in the world for trading the €.
While many businesses are deliberately waiting to understand more about Brexit, they are also nervous about their inaction. They want to understand what, exactly, everyone else is doing about Brexit before making a call on whether to act. We also know that whilst some businesses are actively preparing for the unknown, they, too, have a simple question: “Whatever is being done, assuming, to comply with Brexit expectations, are those the right things to do and what are the points that are being missed?”
One thing we can say for certain is that there is no right or wrong in this strange post-Referendum world.
Brexit will force many banks in the UK and elsewhere to undertake a fundamental review of their operations and structures.
This paper is an attempt to understand and highlight the possible steps that financial institutions can take to ascertain their acceptance to the changes resultant of Brexit.