During the few first months after Brexit, the UK exported more food and drinks to countries outside the EU than countries in the EU as exports to the bloc plunged. According to the Food and Drink Federation (FDF), in the first three months of 2021, sales to non-EU countries made up 55% of all UK food and drink exports. A year prior, this figure sat at just 40%.
The FDF also said that exports to non-EU countries only rose by 0.3%. This means that overall exports of UK food and drink have dropped to £3.7 billion from 5.1 billion this time last year. Dairy exporters have been hardest hit. Exports of milk and cream to Europe dropped over 90%, with cheese exports falling by two-thirds. Dominic Goudie, the federation’s head of international trade, has called the loss a disaster. However, the Food and Drink Exporters Association's John Whitehead commented that the drop will partially be due to European importers having stockpiled goods ahead of Britain’s exit from the EU.
The European Commission recently published a proposal that aims to govern the conduct of financial service providers that deal in cryptoassets. The Markets in Crypto-Assets Regulation (MiCA) is defined as a framework of measures that will be implemented to enable and support digital finance in regards to innovation and competition while mitigating risk for all stakeholders. Work on this regulation framework began in 2018 with the end goal of harmonising the EU’s efforts towards regulating currently out-of-scope cryptoassets.
Instead of disregarding the innovation and rising popularity of cryptoassets, the European Commission has been exploring ways through which they can embrace the digital transformation that is currently taking place in economic markets worldwide. The implementation of MiCA is part of a bigger legislation process under the digital finance package, which consists of proposals around cryptoaassets. The main aim of the digital finance package is to facilitate creation, competitiveness and access to innovative cryptoaassets for trading services customers in Europe while ensuring financial stability and customer protection.
A summary of the regulatory objectives
The proposal also intends to create an environment that will foster innovation around cryptoaassets rather than installation of retrogressive guidelines that will stifle the rise of new technologies. Because there has been increasingly independent policing within European countries, it was necessary for the EU to step in and regulate the digital currencies markets.
What is being regulated?
MiCA intends to regulate every digital representation of value which has the capability of being shared using Distributed Ledger Technology (DLT), disregarding financial instruments that are deemed out-of-scope for existing regulatory framework such as MiFID and EMD. They should fall under the below categories:
- E-money tokens – cryptoassets with a stable value that is based on only one fiat currency whose purpose is to serve as electronic money would. Examples of these are Libra, Euro and USDC.
- Utility tokens – which are issued under a non-financial basis for the purposes of providing a third party with access to a predetermined resource or service. An example of this is a FileCoin Token.
- Cryptoassets – for example Bitcoin, Litecoin and Ripple.
- Asset-reference tokens – whose purpose is to maintain a stable value by referencing one or more currencies that are legal tender such as fiat currency. They can be used as a store of value or a means to purchase goods or services. An example of this is Libra Basket Coin.
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What are the new rules that apply to cryptoassets?
Under these proposed regulations, a Crypto-asset Service Provider (CASP) is defined as an entity that is involved in the provision of cryptoasset services to a third party on a professional basis.
Issuers of the cryptoassets are required to publish a definitive white paper and send it to the relevant financial services regulator for review and approval for example the BaFIN in Germany. The issuer of the cryptoasset can only proceed if the proposal is approved.
Service providers that deal with cryptoassets will also be required to seek approval from the relevant regulators in the jurisdiction in which they operate. The regulator requirements include things like minimum capital reserves, security of the infrastructure on which the cryptoasset is offered and corporate governance.
Of course, MiCA also spells out its position regarding issues that affect trading in securities such as insider trading and market manipulation.
Trailblazing in the EU
In essence, MiCA is taking the unbeaten path when it comes to regulation of crypto-assets. While some countries are banning these types of assets, it is commendable to see that the European Union is interested in fostering an environment that will promote innovation and still protect stakeholders. The intended result is to create a transparent and harmonised European crypto-asset market that invites global investors and customers to participate.
UK banks and insurers have shifted thousands of jobs and over £1 trillion in combined assets out of the UK and into European Union hubs due to the impact of Brexit, a new study has confirmed.
According to research from think tank New Financial, more than 440 firms in the UK banking and financial services sector have relocate parts of their business, moved staff or established new EU entities in response to Brexit.
Roughly £900 billion of the relocated assets were moved by banks – equivalent to about 10% of the total assets held by the UK banking system. Insurance firms and asset managers shifted a further £100 billion.
“While this is the most comprehensive analysis yet of the impact of Brexit on the City, we think it is an underestimate: we are only at the end of the beginning of Brexit,” New Financial warned in its report.
The UK exited from the EU on 31 December after finalising a trade deal that did not cover the financial services sector. Without access to the single market and the so-called financial passport, which had allowed UK-based financial services companies to offer their services in Europe, firms have moved assets to EU nations to continue their operations.
The study estimated that between 300 and 500 smaller EU financial firms may open a permanent office in the UK, far lower than earlier forecasts of around 1,000. The study added that, while the UK still holds a £26 billion annual trade surplus n financial services with the EU, this figure may decrease as its dominant position is chipped away.
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In the lead-up to Brexit, EY found that 400 relocations were announced at major financial services firms in London.
JPMorgan confirmed on Monday that it is financing the nascent European Super League, a breakaway group featuring 12 of Europe’s biggest football clubs that threatens to shake up the sport.
Six Premier League teams – Arsenal, Chelsea, Liverpool, Manchester City, Manchester United and Tottenham Hotspur – are involved in the deal, alongside AC Milan, Atletico Madrid, Barcelona, Inter Milan, Juventus and Real Madrid.
Each of the clubs will receive a one-off payment of €3.5 billion ($4.5 billion) for their participation in the League. Organisers stated that a further three founding members would be announced, with five places left open to qualifying teams each year.
"I can confirm that we are financing the deal, but have no further comment at the moment," a spokesperson for JPMorgan said in a statement to AFP.
The announcement of the Super League appeared to be timed to pre-empt UEFA’s scheduled unveiling of widespread reforms to the Champions League on Monday. The move has been met with widespread criticism from UEFA and the Premier League, as well as UK Prime Minister Boris Johnson, who has promised to “make sure” that the European Super League “doesn’t go ahead in the way that it’s currently being proposed.”
The Premier League said in a statement: ““A European Super League will undermine the appeal of the whole game, and have a deeply damaging impact on the immediate and future prospects of the Premier League and its member clubs, and all those in football who rely on our funding and solidarity to prosper.”
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Shares in Juventus rose 10% in early trading on Monday, while Manchester United stock slipped 0.6%.
Danske Bank AS announced on Monday that CEO Chris Vogelzang has resigned after being named as a suspect in connection with an investigation into potential violations concerning the prevention of money laundering at ABN AMRO in the Netherlands.
Vogelzang held several positions at ABN AMRO between 2000 and 2017, including as its head of global retail and private banking activities and as a member of its management board. In a statement on Monday, he said that he would step down to prevent speculations about his person interfering with the development of Danske Bank.
“I am very surprised by the decision by the Dutch authorities,” said Vogelzang. ““I am very surprised by the decision by the Dutch authorities. I left ABN AMRO more than four years ago and am comfortable with the fact that I managed my management responsibilities with integrity and dedication.”
“My status as a suspect does not imply that I will be charged.”
Karsten Dybvad, Chairman of Danske’s board of directors, commended Vogelzang for his efforts at the company. “He has been instrumental in the initiation of the ongoing transformation of Danske Bank and the progress and results it has already created,” Dybvad said. “We fully understand and respect his decision and thank him for his huge efforts.”
Danske has tapped Chief Risk Officer Carsten Egeriis to replace Vogelzang as CEO, effective immediately. Director Gerrit Zalm has also elected to resign from the bank’s board effective today.
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Danske Bank previously became the subject of a money laundering investigation after admitting that it failed to appropriately vet about $230 billion in transfers through its branch in Talinn, Estonia, primarily by Russian clients, between 2007 and 2005.
This ongoing disruption, coupled with changing consumer behaviour characterised by the growing preference toward mobile and online services, is driving regulatory changes that are shaping the future of finance.
While this is happening to varying degrees in regions and countries around the world, there are local nuances to consider. This is particularly true in the United Kingdom, where speculation is rife around what the future will hold for the UK following its departure from the EU and the impact this will have on financial services.
As one of the world’s leading financial centres, the UK is well-positioned to keep pace with changes in the industry. But in terms of regulations, there are still several questions around how the UK will adapt, what legislation it will adopt or modify, and what impact this may have on the wider EU region.
Post-Brexit PSD2
The Payment Service Directive 2 (PSD2) has been a linchpin of European financial regulations since its introduction in 2018, increasing security for online transactions and encouraging more competition through open banking.
The transition period ended on 1st January 2021 and enforcement of PSD2’s Strong Customer Authentication requirements for merchants will take effect at different times. The EU’s deadline is on 1st January 2021 while the UK’s is on 14th September 2021, which will no doubt cause a great deal of confusion for consumers.
It’s well known that digital currencies have – in their relatively short history – been used for illegal activities, so building trust in the technology through compliance will be a key focus for regulatory bodies in the future.
In the case of a no-deal Brexit, a draft version of the UK Financial Conduct Authority’s (FCA) Regulatory Technical Standards on Strong Customer Authentication and Common and Secure Open Standards of Communication indicates that the UK regulators would continue to accept the EU’s eIDAS certificates (or electronic Identification, Authentication and Trust Services) for authenticating third-party providers to banks. However, the document also recognises that UK entities may require alternative methods, suggesting that both routes are still on the table.
Discussions are still ongoing, but time is running out. As security is a key component of the directive, mandating the use of transaction risk analytics and replication protection in mobile apps, any new UK-specific variant will have to ensure that consumers remain protected and banks can still offer fully seamless digital experiences.
Driving digital identities
Some of the biggest regulatory developments throughout 2020 have come in the area of identity verification, with COVID-19 accelerating digitisation initiatives and investment. As an increasing number of customers are either reluctant or unable to visit a bank branch, fully digital and seamless identity verification has become a key requirement for remote account opening and onboarding.
This is an area where regulations – such as Know Your Customer (KYC) – play a key role, and where authorities have had to move quickly. For example, in response to the pandemic, the UK FCA issued guidance on digital identity verification permitting retail financial firms to accept scanned documentation sent via email and ‘selfies’ to verify identities.
This was supplemented by a 12-month document checking service pilot launched by the UK Government in the summer. Participating private sector firms can digitally check an individual’s passport data against the government database to verify their identity and help prevent crime.
And this is just the beginning. There are plans for private-sector identity proofing requirements and work being done to update existing identity-checking laws to become more comprehensive. Perhaps most significantly, the UK government plans to develop six guiding principles to frame digital identity delivery and policy: privacy, transparency, inclusivity, interoperability, proportionality, and good governance.
This all points towards a financial future that will be driven by digital identities. With customer behaviour likely changed forever, digital identity verification will be essential to improving the remote onboarding experience, while also minimising the threat of fraud and account takeover attacks.
The evolution of AML
Anti-money laundering (AML) legislation is also set to progress in the future, driven largely by an increasing focus on cryptocurrencies. Digital currencies are currently garnering plenty of attention from European regulators, as illustrated by the introduction of the 5th Anti-Money Laundering Directive (AMLD5).
EU member states were required to transpose AMLD5 into national law by the beginning of the year, with the goal of preventing the use of the financial system for money laundering or terrorist financing. One of the directive’s key provisions focuses on restricting the anonymous use of digital currencies and, as such, it now applies to both virtual cryptocurrency exchanges (VCEPs) and custodian wallet providers (CWPs).
VCEPs and CWPs that were previously unregulated must now follow the same rules as any other financial institution, which includes mandatory identity checks for new customers.
With the role of cryptocurrencies in our financial system expected to increase significantly over the coming years, we can expect European regulations to continue in this vein – particularly in a leading FinTech nation like the UK. It’s well known that digital currencies have – in their relatively short history – been used for illegal activities, so building trust in the technology through compliance will be a key focus for regulatory bodies in the future.
2020 has certainly been a year of upheaval for financial services regulations and we can expect this trend to continue into the new year. With digitisation in the industry evolving at a rapid rate, governments and lawmakers will have to work hard to keep pace. As the EU and the UK have shown, the future of finance will have plenty to offer.
Andria Evripidou, Policy Lead at Yapily, shares her thoughts with Finance Monthly on the state of finance in Europe and its opportunities for improvement.
Fragmentation has been one of the biggest obstacles to growth in the European Open Banking ecosystem to date. Even within the Berlin Group, there are differences in how banks communicate with technology companies and how they connect with APIs.
Because of this disparity, Europe has been slower to adopt Open Banking than the UK and other countries around the world. There were 178 firms in the UK permitted to share bank account and payment information with third party providers (TPPs) in 2020, but only 36 in Germany, 18 in France, 9 in Spain and 6 in Italy.
There is a real opportunity here to consolidate the market and deliver more value-add financial services with the promise of Open Finance. Promoting innovation and creating a level playing field for all payments and data companies, while giving consumers greater visibility over their data and enhancing their financial wellbeing.
Open Banking is the first mile in the Open Finance marathon, and Europe’s regulators are starting to make their next moves towards crossing the finish line.
Catch me if EU can
There are a number of different factors that have contributed towards the fragmented Open Banking landscape we see across Europe today. In some countries, like the Netherlands, consumers have deep-rooted trust in their banks but a distrust in cards. As such, iDeal, an eCommerce payment system initiative driven by Dutch banks, was quickly adopted when it launched in 2005.
In comparison, the level of enforcement by National Competent Authorities (NCAs) of PSD2 requirements was patchy in places. Which in turn created a fragmented approach to PSD2’s implementation across central Europe. And so led to mixed uptake in adoption.
There is a real opportunity here to consolidate the market and deliver more value-add financial services with the promise of Open Finance.
How developed a country’s financial ecosystem is has also played a role in Open Banking adoption. Eastern European countries, for example, that have more outdated financial products and infrastructure have been more receptive to innovation than countries with more advanced financial systems that already meet consumer needs.
The ingredients for Open Banking success
The maturity of the market is intrinsically linked to the adoption rate – adding another layer of complexity to the landscape. Those in the industry know and can see the potential of Open Banking and Open Finance. But wider consumers and businesses are still in need of educating on its benefits and security.
There are active discussions and working groups on how to move Open Banking adoption forward. To address the issue and catch up with the UK and other countries like Australia, the European Banking Authority (EBA) recently published its views on what NCAs should do to further adoption across the region. The aim was to ensure they remove any remaining obstacles that could prevent TPPs from accessing payment accounts or which restrict EU consumers’ choice of payment services.
This move has been well received. It is likely that, going forward, Open Banking integration within Member States will become easier. Over time, this move should make payments via Open Banking more prominent within the mainstream.
An open future for Open Finance
The natural evolution of Open Banking is Open Finance, which has the potential to completely change the way we look at our financial lives and bring about the fourth industrial revolution. Use cases are boundless, and the primary objective is enabling people to properly understand and then ‘optimise’ their overall financial position, ultimately leading to greater financial inclusion for all.
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In an Open Finance era, consumers can get a better understanding of their investments using financial management applications that have a holistic view of an individual or business’ financial position in real-time. This will give consumers the ability to consider whether investments continue to meet their needs with access to up-to-date information on costs, tax treatment, performance, risk and other necessary factors.
The same consumer-centric approach that will see the rise of Open Banking across Europe will lay the road for Open Finance.
We have a lot to learn from the Open Banking experience to date to ensure the success of Open Finance. We also know that whichever shape the legislative framework ends up taking, Open Finance needs to be secure and easy to use, and that user journeys need to be properly considered ahead of any legislation design.
A lot more needs to be harmonised compared to the Open Banking experience. And without adequate supervision by NCAs, the implementation of directives is likely to be patchy and may hinder the uptake of Open Finance. But there’s no doubt that we will see the European Open Banking system consolidated in the coming years, giving way to the rise of Open Finance.
Finance Monthly hears from Rob Coole, VP of Cloud Technologies at IPC, on the outlook for the UK fintech industry post-Brexit.
In recent years, the fintech industry has become an important focus for the UK, with the sector going from strength to strength. By the end of 2019, the UK's fintech sector was worth £11 billion in revenues, and accounted for roughly 8% of total financial services output. Adding to this, 44% of fintech companies that are based in Europe and valued at over $1 billion are based in the UK, while the UK continues to gain new investment in the fintech sector.
In a similar way to how the COVID-19 pandemic has introduced wide-ranging changes to the way we work and live, the impact of Brexit will continue to be felt for a long period of time.
While no single EU rival to the City of London has emerged yet, different Member States are taking advantage of the uncertainty presented by Brexit and are positioning themselves as new homes for fintechs. For example, both Lithuania and Malta have let it be known that they can provide new homes for UK-based fintechs, with Lithuania even running a PR campaign promoting itself as “the new capital of fintech” in the midst of the UK’s exit from the EU. This provides fintechs with a regulatory authorisation in an environment which has an entry point to the EU, something that the UK is now unable to offer.
The Opportunities
Nevertheless, the Brexit situation is not necessarily all doom and gloom. There is the potential for a number of new opportunities to emerge on the back of Brexit for the fintech sector. For example, the combination of Brexit and the COVID-19 pandemic have given fintechs an opportunity to collaborate like never before in order to piece together end-to-end solutions. This has seen the emergence of a hybrid-European view as providers look to share connectivity across mainland Europe and the UK, with lots of solutions being designed between Frankfurt, Paris and London. Furthermore, this increase in collaboration should resolve a number of issues, such as reducing the dependency that fintechs have on countries and specific technologies.
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Additionally, the Kalifa Review – a report on how the UK can maintain its leading global fintech reputation – laid out a number of recommendations to help the UK’s fintech industry to thrive in a post-pandemic, post-Brexit world. These recommendations include making changes to UK listing regulations so as to make the UK’s Initial Public Offering (IPO) market a more attractive location for fintechs, as well as creating a centre of Finance, Innovation, and Technology, to drive both domestic and international collaboration in order to boost growth across the country's fintech ecosystem. In addition to this, Chancellor Rishi Sunak’s 2021 Spring Budget included a new fast-track visa for specialists in the fintech sector – a recommendation from the Kalifa review that aims to provide a boost to the fintech industry post-Brexit. If the UK is able to take on board these recommendations, then there is an opportunity for the UK fintech sector to continue to grow and thrive following Brexit.
Finally, it is also worth noting that the fintech UK has always had a strong ecosystem. This is down to a number of factors, including having good and solid infrastructure already in place, a deep understanding of the industry, and a willingness to continue to innovate and develop fintech. In fact, Brexit provides the UK with a fantastic opportunity to change its financial regulation, which could help make the country even more appealing to fintechs.
Although the winners and losers of trading venues has been a focus for many in the aftermath of Brexit, these volumes overlook the hybrid models that are being created between London and other key European, and international markets. Today, there is more focus on global connectivity, reducing silos and increasing business resilience. Cloud and SaaS models will continue to be key to supporting customers, wherever they are in the world, regardless of borders.
As such, while both Brexit and the COVID-19 pandemic have presented numerous challenges, their combination has created a great opportunity for the UK’s fintech industry to continue to thrive and for the UK to remain an unquestionable leader when it comes to fintech.
Dima Kats, CEO of global payments company Clear Junction, discusses some of the unforeseen complications of Brexit and the possible solutions.
As people increasingly live and work across borders, there is a greater need for money to move freely too. But what happens when the nature of one of those borders changes? Following the UK's recent departure from the European Union (EU), there has been a shift in some financial institutions' behaviour within the EU. Specifically, in the processing of Single Euro Payments Area (SEPA) transfers.
Organisations within the UK are still learning the full impact of the UK's recent Brexit deal. However, over recent weeks, corporations making SEPA payments from accounts in the UK to the EU are experiencing additional fees and payment refusals.
Starling Bank recently noted that several companies across Europe have been refusing to accept direct debit payments from some Starling euro accounts because they contain the country code ‘GB’.
The UK retains SEPA membership
It is important to note that the UK is still a SEPA member and that even though the UK is no longer part of the EU, it is still very much part of the Single Euro Payments Area. Refusing to accept payment from the IBAN code of a SEPA member is a violation of EU rules.
Some European banks, notably in Spain and Italy, have introduced recent charges to payments coming from or going to the UK. These new fees can vary from an €18 flat charge to a percentage of the amount shared or received, ranging from 0.3-0.5%, which can add up to a significant figure.
Refusing to accept payment from the IBAN code of a SEPA member is a violation of EU rules.
While this situation has understandably caused some consternation, the UK's continuing membership of SEPA means we believe these rejections are temporary outliers. Indeed, this is merely one of several hiccups because of the regulatory changes. We are still experiencing the aftershocks of Brexit across Europe and will continue to do so for a while. However, in the coming months, we should see a more standardised approach emerge across EU financial institutions, with less disruption to providers and consumers as awareness of the new regulations increases.
Despite the litany of recent Brexit plans formulated by governments and negotiators, none explicitly addressed the fintech industry. Fintech professionals understand the challenges of building relationships and facilitating seamless transactions between institutions. The smooth operation of these processes, established over several years, was hard-won, and it is unlikely that the industry wants to rewind the clock to how things were before SEPA. The mutual participation in the clearing schemes in Europe and the UK has worked well and it would be counterproductive to change this because of Brexit.
We can only praise the European Central Bank’s initiatives to have the UK remain part of SEPA. This decision, taken two years ago, has contributed to the peace of mind of many fintech professionals in relevant countries. As a result, we hope there will be minimal impact on the clearing schemes' operational process in the coming months.
The need to educate and assist the customer
Currently, regulatory frameworks between the UK and the EU are aligned, and there is no reason for extra fees. Which leaves us wondering what consumers and institutions should do if they do face any additional charges?
As a first step, consumers need to be aware of what is going on and any potential issues. Some banks, such as Starling and Revolut, have already taken proactive action in this area, but more widespread initiatives would be welcome.
For the consumer, there are currently no easy, off-the-shelf solutions. This complexity means that people need to speak to their banks in the first instance and then the local regulator to add pressure and make local banks comply with the SEPA scheme rules.
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What would be useful here is the increased provision of easy-to-access and easy-to-use tools, documents and templates for consumers to share with the EU banks they are dealing with that may be implementing additional fees. The right way to address this situation is to give consumers that power.
For financial businesses who are unclear of regulatory frameworks post-Brexit and what this means for their customers, they should work closely with a regulatory services provider that is a participant member of SEPA, enabling clients to have unrestricted access to the EU interbank clearing system.
At Clear Junction, we value our SEPA membership highly and recognise its vital role in simplifying payments across Europe. We want to see common sense prevail and hope that Brexit has no lasting impact on the future of SEPA payments.
Credit card giant Mastercard is set to increase the fees it charges EU merchants for taking payments from online shoppers in the UK by at least 400%, sparking fears that merchants could choose to pass on these costs to UK consumers.
The Financial Times, which first reported Mastercard’s latest move, said that the increase would benefit banks and card providers rather than Mastercard itself.
Since 2015, the European Commission has capped credit card interchange fees at 0.3%. Now that the UK is no longer part of the EU, however, payments between the UK and the European Economic Area are now deemed “inter-regional”, so the interchange fees will increase to 1.5%.
The fee for debit card payments is also slated to rise from 0.2% to 1.15%. Both fee increases are set to take effect on 15 October.
MP Kevin Hollinrake, chair of the parliamentary group on Fair Business Banking, said the move “smacks of opportunism.”
"I would urge the regulators to step in as a matter of urgency to ensure that financial institutions do not use Brexit as an opportunity to hike up costs that consumers will ultimately bear," he said in a statement to the FT.
Anton Komukhin, Head of Product, at Unlimint, also expressed concern. "The increase in fees announced by Mastercard for UK purchases from the EU will definitely be a challenge for businesses on both sides (both EU and UK) and such a significant increase in price will undoubtably impact trade with the UK," he said. "It’s obvious that such a reaction is not aimed at maintaining cross-border turnover or trade - and looks only like an attempt to make more money from merchants in an already challenging environment due to Brexit and the pandemic."
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Mastercard has defended its decision, pointing out that the new interchange levels are already paid by EEA merchants on all cards issued outside of the EU, and that there is no evidence that European businesses charge consumers in these regions higher prices than those levied for consumers within the EEA as a result of this.
"In practice, only EEA merchants making eCommerce sales to UK cardholders will see a change,” the firm said. “Interchange is not a consumer facing cost but the fees paid between merchants and banks for the provision of payments. Consumers should not feel any impact of changes in interchange fees.”
This latest change comes as UK businesses face a number of new hurdles stemming from the country’s withdrawal from the EU. Increased red tape has led to delays in goods imports and exports, and the trading of European shares has moved away from London due to new restrictions.
Dion Travagliante, Head of North America at Hoptroff, outlines the importance of MiFID II compliance in ensuring UK firms remain internationally recognised.
Announced on Christmas Eve, the Trade and Cooperation Agreement – better known as the ‘Brexit Deal’ – leaves lots of question marks for those in financial services. Before anything else can be decided, the EU must first accept that Britain’s financial regulations are “equivalent” to those in the European Union: the Markets in Financial Instruments Directive (MiFID II).
Since its implementation in January 2018, MiFID II has transformed financial services with policies that promote transparency and trust across processes within the industry. As Britain navigates a new economic arena, many are hoping to avoid further instability by conforming to the existing internationally respected regulations.
Synchronising time under MiFID II
The MiFID regulations were implemented after the global financial crash of 2008 for a very simple reason: to prevent another crisis. The rules cover areas of financial practice that most people have never even considered. This means that British businesses are currently following an extremely clear and thorough guidebook that protects them from financial damage.
The rules on time synchronisation are one notable example of this. Accurate time is at the heart of electronic trading – but all clocks naturally drift. It might not matter if the time on your phone is a few seconds out, but it does matter if the time is wrong on a busy server that transfers thousands of pieces of data every second of the day. If your server’s clock is wrong, data logs can become confused, transactions may be cancelled, and you will be vulnerable in the event of a dispute.
Accurate time is at the heart of electronic trading.
This is where MiFID II comes in. Article 50 restricts every server that is an active market participant to a maximum divergence of between 100 microseconds and 1 millisecond (depending on the type of trading) from the benchmark of UTC (Universal Time).
MiFID II is vital in protecting the best interests of British businesses, but the importance of the regulations go even further. As British financial services look to recover from the shock of the COVID-19 pandemic, Britain must do everything it can to stabilise its position in the global economy.
Amending MiFID II is a threat to this stability, as international trust in a country’s financial market is dependent on the extent of its regulations. This was made evident last February when the pound dropped sharply against the US dollar following suggestions of a MiFID “shake up” by the ESMA.
Smarter regulating solutions
In the past, some groups have been resistant to upholding financial regulations because it has been expensive to do so. To get precision timing, companies had to install and maintain a satellite receiver at every active trading venue, secure access to a grandmaster clock, and spend resources on monitoring and verifying their data logs.
Recent technological developments have made this reluctance redundant. Smarter solutions have entered the market that make carrying out the best financial practice a lot easier and more cost-effective. Traceable Time as a Service (TTaaS) is the premier network-delivered solution for time synchronisation. The software product synchronises your clocks and monitors data for you; no hardware or maintenance is required.
Financial firms across Britain have spent the past three years implementing processes that adhere to MiFID II. Instead of “shaking up” the rules once again, consistency is needed as the industry moves forward.
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Ever since its inception, MiFID II has played an essential role in rebuilding trust in the financial markets. Regulations like those placed on time synchronisation ensure that these markets are both reliable and protected and they have never been more easy or cost-effective to implement. This trust is something that Britain should not take for granted as the world enters an extremely turbulent economic period.
Europe’s car industry has suffered its largest drop in sales since records began, stemming from the impact of the COVID-19 pandemic.
New data published on Tuesday by the European Automobile Manufacturers Association (ACAE) showed that new car registrations in the European Union fell by 23.7% in 2020, the sharpest annual decline ever seen by the industry body. 3 million fewer cars were produced than in 2019, and only 9.9 million new car registrations were recorded in the bloc.
According to the ACAE, the decline is owed to the COVID-19 pandemic and its disruption of car assembly lines and consumer demand.
“Containment measures – including full-scale lockdowns and other restrictions throughout the year – had an unprecedented impact on car sales across the European Union,” the organisation said.
Every one of the EU’s 27 member states saw double-digit sales falls during 2020, according to the ACEA’s figures. The greatest fall was in Spain, with a decline of 32.3%, followed by Italy at 27.9%. Sales in France and Germany also dropped by 25% and 19% respectively.
The worst Europe-wide slump was felt in March and April, when COVID-19 made its initial impact on Europe and the first lockdown restrictions were put in place. However, sales have remained weak since then.
New car registrations dropped by 76.3% across the EU in April as these first lockdowns were established.
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New registrations also fell by 3.3% in December, marking the third monthly decline in a row, as new lockdowns have been imposed in European nations.
The car industry represents 7% of the EU’s GDP and employs almost 15 million people directly and indirectly, the ACEA said.
