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Julian Eyre | published on 8th August 2018
How will Brexit impact the securities finance industry?
Simon Davies – The number of large European financial firms (Banks, Asset Managers, Insurance) with entities operating in the UK that will be impacted as the UK leaves the EU is greater than UK firms with European entities. So, both UK and European firms should consider how their operating model will be impacted by the various exit options and how they continue to access liquidity and deal with additional regulatory scrutiny from both their host and their home regulators.
Clearly, firms have been preparing for some time now, but challenges remain – especially in the Securities Finance space.
- Legal documents: Repapering has typically focused on derivatives contracts, and SecFin ones – such as GMRA, GMSLA, PB and Triparty agreements run the risk of being left to languish in employees draws – these need digitising, assessing for impacts and repapering
- Funding arrangements: Firms intercompany funding arrangements are already complex, and new entities or changes to regulatory requirements will lead to increasing complexity, impacting both trading flows and collateral management.
- Operating model: Ensuring that your operating model is understood and building in the required changes and flexibility required will be challenging for most firms. The business domain models need to define the future state for people, processes and responsibility
- Timing: The timing of Brexit and the approach / scenario that is finally implemented will obviously have consequences
- Regulation: a detailed view of the regulatory impacts on the business post SFTR needs to be clearly defined. Traceability of compliance to regulators needs to be evidenced.
At The Field Effect, we specialise in Target Operating Model design and can help you identify how process, function, data, technology, people, revenue, and controls work together in order to deal with the challenges ahead and accelerate the delivery of change.
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