Brexit and MiFID II: What it means for financial services______

Jon Willis, Chief Commercial Officer


Brexit has caused a number of uncertainties among financial institutions although the immediate term volatility appears to have calmed.  A recent Calastone survey, which comprised of managers, distributors and transfer agents, acknowledged Brexit will cause market disruption, with over two thirds believing the economic malaise could be a long-term phenomenon. That being said, fund managers, transfer agents and fund distributors are split on the issue, according to the Calastone survey.

While much has been said about UK financial institutions being forced to re-locate to other EU countries, 58% stated that they would keep their staff in the UK. This is highest among transfer agents, with two-thirds stating Brexit will not result in them relocating.

Most firms appear to be adopting a wait and see approach around relocating staff, and actively monitoring the situation rather than implementing any designs on moving employees into other EU countries until more clarity over the UK’s future relationship with the EU emerges.

But what impact does Brexit have on the regulatory landscape? The answer is very little.

What now for European Regulation and MiFID II

The majority of financial institutions expect much to remain the same despite the vote. 100% of fund managers agreed that Brexit would still mean they had to comply with EU regulations, as did two thirds of transfer agents, and 50% of fund distributors.  Fund managers, unlike platforms and transfer agents, tend to be global by nature, and many will have a diverse range of investors across all geographies including Europe. Non-compliance is not an option, as this would effectively shut them out from major European markets.

MiFID II and MiFIR will become law in January 2018, a deadline that is approaching quickly. Official exit negotiations have yet to begin and the UK political establishment has roundly said Article 50 of the Treaty of Lisbon will not be invoked until 2017 at the earliest. Negotiations, according to the terms and conditions laid out to facilitate smooth exits by member states, are expected to be completed within 2 years. MiFID II will be transposed into national law before Brexit becomes a reality. Irrespective of time spans and hypothetical time-lines, global distributors and fund managers operating in Europe (and the UK) will need to be compliant by January 2018. This has not changed despite the vote.

Don’t delay

Firms must continue to work towards a MiFID II compliance programme as they were. What’s important is to not allow the initial uncertainties following Brexit to disrupt this planning and preparation.

As examined in a recent article,MiFID II Product Governance’, the scale of the task in achieving MiFID II compliance should not be underestimated.


Although Brexit caused some initial short-term concerns, the long-term consequences are unknown. There are however some issues which are clear. Regulations such as MiFID II will remain in force post-Brexit, and this has been recognised by financial institutions such as fund managers, distributors and transfer agents.

Firms should consciously use their MiFID II compliance exercises as a way to improve their overall operational efficiencies and decrease their costs by working with service providers that put automation at the heart of what they do. This will help enable fund managers and distributors to accurately identify their clients, and the products that ought to be sold to them when MiFID II takes effect.

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