Brexit

European Union:-
The EU is a unique economic and political

partnership between 28 countries that together
cover much of the continent.
What is Brexit??
BRITISH +EXIT= BREXIT
It is an abbreviation for “British Exit” referring to
UK’s decision of leaving the European Union (EU).
Brexit – The UK’s decision to leave
the European Union
 On June 23rd 2016 the UK
voted in a referendum to
leave the European Union.
 Prime Minister David

Cameron resigned the
morning after the vote.
 A few weeks later, Theresa

May was elected leader of
the Conservative Party and
new Prime Minister.
Article 50 was invoked in March
 The terms of the UK’s new 2017, there was a maximum
economic relationship with period of two years before the UK
the EU . finally leaves the European Union.
BREXIT IMPLICATIONS
ON
FINANCIAL SECTOR
 The impact of Brexit found that “disruptions to the level of market

access in financial services are economically costly,” with the U.K.
bearing the brunt of the negative ramifications. In such a situation,
Britain “experiences a direct loss of financial services activity and
also loses from the wider fragmentation of EU financial markets.
 If British banks are not granted the extra benefits they are seeking in
a financial relationship with the EU, this could give U.S. and Asian
financial institutions a boost in Europe by opening up competition.
That could potentially have a negative effect on British banks.
 Finance and related professional services bring about $248 billion annually into
Britain, representing 12% of the British economy. Within the EU, the U.K. hosts the
largest financial services sector – accounting for 24% of the gross value added
produced by that sector in the EU in 2015, the PwC report on the impact of Brexit
found.
Now that London’s standing in the finance world is being threatened by the specter
of restricted access to the EU market, those numbers signal the extent of the city’s
exposure to Brexit fallout. London could lose 10,000 banking jobs and 20,000 roles
in financial services, with $2.1 trillion of assets potentially being moved out of the
UK.
In addition, real estate (at least outside the U.K.) may become more attractive as
a reassuringly tangible asset class, particularly if British and European financial
markets and foreign exchange rates become increasingly volatile. Gateway cities
and secondary markets in the U.S. could see a rise in the appeal and value of their
real estate just as property prices drop in Britain and possibly other parts of Europe.
 Brexit will have consequences for those financial institutions based in the UK, who
rely on the European Economic Area (“EEA”) “passport” to access the single
European market for financial services.
Currently, financial institutions authorized by a European competent authority under
an EU single market directive can provide services across the EEA on the basis of their
home state license without having to be separately licensed in the target jurisdictions.
This is known as "passporting".
One dilemma now facing UK financial institutions is that post-Brexit they may no
longer be able to passport their services across the EEA. Or at best, they will only be
able to do so within a new framework which may be the result of the terms under
which the UK’s exit from the EU is agreed.
 The possible loss of passporting rights may not be the end of cross-border financial
services from the UK. One option to consider is the so-called “third country” provisions
provided for in certain directives, such as MiFID, AIFMD and Solvency II Directives.
Thee provisions contemplate permitting third country financial institutions, i.e.
institutions that are not located in the EEA, to provide some cross-border services in
the EEA without local licenses if the third country jurisdiction has laws that are
“equivalent” to those of the EEA.
 The UK government is rightly leaving every option on the table: this is not just a
negotiation about future trade relations but the start of a new era whereby both
will look to shake one another’s financial stability for their own benefit. The UK
wants to use the weight of London to its advantage in securing a wider trade deal
but the EU doesn’t want the UK or its banking system to benefit from single
market access any longer than necessary.
 One of the major benefits of the Brexit is the UK’s ability to go out on its own and
strike deals with the rest of the world d but the immediate job will be replacing
the ones the UK will loose because of ‘Brexit’ and this why there is a strong
argument that the UK needs to be free to begin negotiating with the other
countries during transition period to avoid with non EU nations from collapsing
nature.

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European Union:-

The EU is a unique economic and political

 Prime Minister David

 A few weeks later, Theresa

 The impact of Brexit found that “disruptions to the level of market

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