Brexit

Wrangles over the future of euro interest rate swap clearing after Brexit were revived this week, with both European Central Bank president Mario Draghi and outgoing US Commodity Futures Trading Commission chair Timothy Massad suggesting that the EU should maintain oversight of the UK market. Meanwhile, two London-based executives argued that the UK should extend its EU exit process to five years to avoid losing swaps business to the US.

The Brexit vote and the election of Donald Trump laid bare the poor predictive power of the massed ranks of financial analysts and traders. But when these political cataclysms hit the screens, nothing broke. Everyone from the IMF down to the lowest financial scribbler has warned that markets are less resilient thanks to regulation — but in the turmoil following these votes, prices moved but institutions stayed solid. Owen Sanderson reports.

The City of London is "vanishing from the Union’s conversations", according to an MEP from the group of 12 who are scrutinising Brexit negotiations. That suggests preserving London as the financial centre of Europe will not be on the agenda for the EU side in the talks. UK ministers met City representatives this week, but what they offered was "of little use", according to sources at the meeting.

Any transitional arrangement for Brexit, after the end of the two year Article 50 negotiating period, would only give the two sides time for implementation, not for further talks, according to an MEP involved in the EU's negotiating team.

The London RMB hub has been under threat from the Brexit vote, but China seems keen not to jump ship yet. The latest round of meetings have yielded a commitment to launching the long-promised London-Shanghai Stock Connect, the UK Treasury said on November 10.

Gina Miller, the fund management executive who won the court case to give the UK’s Parliament a say on triggering Article 50, said the government has no grounds for its planned appeal to the Supreme Court. Her side could be joined by Scotland, Wales, Northern Ireland and Gibraltar for the appeal hearing.

UK challenger bank Virgin Money had a strong result on its return to the sterling market for more additional tier one paper on Thursday, bankers said, after the country’s High Court ruled Parliament must vote on exiting the European Union.

Barclays almost doubled the size of its frontline buffers during the summer, covering expected volatility after the UK's June 23 vote to leave the EU, while the bank is now planning its future operations based on the end of passporting. Other UK banks, however, were not so cautious, with their buffers almost flat through the Brexit period.

Nissan has done the UK a favour. By playing hardball about wanting assurances from the UK government about Brexit, it has opened the debate into one where real investments are discussed, and tough choices become apparent. The City should follow its lead.

In the wake of Brexit, the French financial sector is taking steps to make good on the threat of chipping away RMB business away from the City of London, Arnaud de Bresson, managing director at industry organisation Paris Europlace told GlobalRMB.

In the days following last week’s Conservative Party conference, banks are increasingly facing up to a "hard Brexit", with no concessions to the needs of the financial services industry, regardless of the economic damage it might cause.

The UK government has lent its voice to the growing current of international opinion that expansive monetary policy has gone far enough, and may even be harming growth. Britain is set to embark on a fiscal stimulus, likely to be welcomed by financial markets.