CM18: Brexit concerns remain
12 October 2018 Amsterdam
Image: Shutterstock
Brexit concerns remain as panellists discussed what the impact of Brexit would have on the collateral market at this year鈥檚 Annual Collateral Management Forum in Amsterdam.
One panellist said: 鈥淎s the March deadline of next year looms, Brexit still lies among a lot of negotiation, we don鈥檛 know what Brexit is going to look like, it could have any kind of impact on the market, but what about the collateral market?鈥�
Another explained: 鈥淔rom a counterparts perspective if your counterparty is located in the UK you need to repaper your documents towards a European entity to be able to move from one jurisdiction to another.鈥�
But he added: 鈥淭here is significant risk related to that especially if it is located in the UK, it could be quite a hostile environment after Brexit.鈥�
An audience member also stated that this description of a hostile environment was also a concern when considering central counterparties (CCPs).
He said: 鈥淚 work for a vendor, but Brexit could mean certain businesses having to initiate a CCP in mainland Europe and possibly a CCP in the UK also鈥� of which he indicated 鈥渕eans two quotes from brokers鈥攎eaning more complexity and more cost鈥�.
But the panellist also said the 鈥渋mpact could be overestimated at the moment. It could remain just political. We鈥檒l know by March, but firms should prepare for any outcome鈥�.
One panellist said: 鈥淎s the March deadline of next year looms, Brexit still lies among a lot of negotiation, we don鈥檛 know what Brexit is going to look like, it could have any kind of impact on the market, but what about the collateral market?鈥�
Another explained: 鈥淔rom a counterparts perspective if your counterparty is located in the UK you need to repaper your documents towards a European entity to be able to move from one jurisdiction to another.鈥�
But he added: 鈥淭here is significant risk related to that especially if it is located in the UK, it could be quite a hostile environment after Brexit.鈥�
An audience member also stated that this description of a hostile environment was also a concern when considering central counterparties (CCPs).
He said: 鈥淚 work for a vendor, but Brexit could mean certain businesses having to initiate a CCP in mainland Europe and possibly a CCP in the UK also鈥� of which he indicated 鈥渕eans two quotes from brokers鈥攎eaning more complexity and more cost鈥�.
But the panellist also said the 鈥渋mpact could be overestimated at the moment. It could remain just political. We鈥檒l know by March, but firms should prepare for any outcome鈥�.
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CM18: The industry isn't doing enough to investigate disputes on collateral calls
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