While the immediate impact of the Brexit vote is focused on the economy and financial markets, the financial services sector in the U.K. is expected to face significant long-term fallout from the decision as well.

“The City of London’s future as a global financial centre is now in question,” says BMO Nesbitt Burns in a report, “and anumber of global banks could potentially relocate some of their operations out of the U.K. and into other EU financial centres in the years ahead.”

According to TD Economics, once the U.K. leaves the EU, it “will no longer be able to engage in unrestricted trade in financial services with the EU, and will be forced to comply with the EU financial regulatory framework without having any input into its evolution.” That’s significant, given that the U.K. currently exports more than 40% of its financial services to the EU.

BMO notes that one of London’s most attractive features is the “passport,” which allows U.K.-regulated banks to open branches in other EUcountries easily, and to sell services across the EU under a single set of rules. “Without these ‘passports,’ U.K.-headquartered banks can still open branches, but they will be subject to more restrictions and more regulations,” it notes. Anyfuture trade agreement with the EU, “will largely dictate the ultimate impact on the U.K. financial sector.”

In the meantime, however, TD says that the U.K.’s strengths that helped grow its financial sector in the first place, including its legal system, its use of English and its global presence, “should continue to work in favour of many financial firms maintaining a presence in the U.K.”

TD adds: “Moreover, the removal from the reach of EU regulators would leave the U.K. financial sector with the ability to tailor its regulations to ensure the global competitiveness of the sector, and could also help fast-track efforts to negotiate trade agreements for financial services with other globally important financial hubs located in the U.S. and Asia.”

Following the vote, the U.K.’s Financial Conduct Authority (FCA) issued a statement noting that while much of the financial regulation in the U.K. is derived from EU legislation, the existing regulation “will remain applicable” until the government formally alters it.For now, “firms must continue to abide by their obligations,” it says. Consumer protections, including those derived from EU legislation, “are unaffected by the result of the referendum.”

“The longer-term impacts of the decision to leave the EU on the overall regulatory framework for the U.K. will depend, in part, on the relationship that the U.K. seeks with the EU in the future,” the FCA says.

The International Swaps and Derivatives Association Inc. (ISDA) published a statement stressing that the vote “will not have an immediate impact on the legal certainty of existing derivatives contracts, nor will it require any immediate contractual change or action from counterparties.”

The ISDA adds: “ISDA has conducted detailed analysis on the contractual implications of Brexit, and has highlighted a number of potential issues that counterparties will need to consider during the two-year negotiation period. Now [that] the U.K. has voted to leave, ISDA will convene applicable working groups and hold a series of industry calls to ensure derivatives market participants are prepared.”

The Futures Industry Association (FIA) also says that it has established an internal working group of senior FIA staff to help develop its agenda for managing the transition.

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