Brexit 2: Some clarification on process if we do, and what we have agreed if we do not.
We published a blog in February which noted that, as corporate treasurers, there is little we can do beyond our normal risk management until the result of the vote is known.
In the meantime, the International Capital Market Association (ICMA), has issued a paper which looks at what will need to be done with what was agreed if the UK remains in the EU, and the process we would undertake if the UK chose to leave the EU.
The ICMA is the place where capital markets participants develop practices to enable functioning in an orderly and efficient manner in those markets.
Some of our members are also members of ICMA. In fact, the ACT is an associate member of the ICMA and joins its forums to represent the corporate issuers as process and documentation are formed. Many of you will be familiar with this when accessing the capital markets such as when issuing bonds.
We recommend members read ICMA's article which provides a thorough, non-political review of the processes of the EU.
A major observation for corporate treasurers is that not only does our membership of the over-arching G20 committee commit the UK to the financial regulation we have implemented since 2008, but continued access to EU markets post a Brexit would require we maintain equivalence with EU regulation. In simple terms, the UK’s continued position as approximately 40% of the EU financial services market would require CRD, EMIR, and MiFID and much more survive Brexit in a UK form.
In the meantime, the immediate effect of the referendum’s date has been volatility in the forex markets, and in particular in GBP:USD. Perhaps a sign of more volatility to come and reinforcing the need to protect the supply and sale prices built into business.
Please feel free to discuss and share your thoughts under this post, or get in touch at technical@treasurers.org.
