Moody’s: Passporting Withdrawal ‘Manageable’ for Big UK Financial Firms, If..

'Hard Brexit' gloom and doom for London’s financial industry deemed an unlikely prospect by Moody’s.

One of the three big credit rating agencies has shared an analysis of the prospects for the financial markets sector in a post-Brexit world. According to the company’s findings, the big companies in United Kingdom’s financial services industry are not likely to be fatally affected by the prospective loss of passporting rights to the single European market, provided that some conditions are met.

Moody’s spells out a condition for its prognosis – UK market rules will have to get recognized by the European Union. This latter condition should become a non-issue after the implementation of the MiFID II (Markets in Financial Instruments Directive). The framework is designed to facilitate the recognition of other regulatory frameworks as compatible with the rules for European Union member states.

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This recognition is key for several industries, which include trading on the foreign exchange markets, but is also extending towards investment advice and underwriting activities. Naturally, the biggest banks and financial services firms in the country will be the least affected with the companies already implementing contingency plans.

While the issue of losing access to the single European market has been one of the top policy debates in the UK, the argument that the lack of passporting for Swiss companies hasn’t killed the financial industry in Switzerland still stands.

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Commenting on the matter, Senior Vice President of Moody’s, Simon Ainsworth, said: “We consider that the equivalence provisions within Mifid II, the complexity of quickly unwinding the status quo and the desire to minimize the initial impact on European-domiciled banks will lead to the preservation of most cross-border rights to undertake business.”

Of course, as usually is the case with opinions, some others disagree:

Earlier in the day, one of the key figures at the European Central Bank, President of the German Bundesbank Jens Weidmann, shared in an interview with The Guardian that the prospects for the loss of passporting access for UK companies are quite real.

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