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various financial services operators from London, for a
variety of reasons, are part of the Euronext Group.
Brexit offers stronger optionality but at this stage I
don’t know what is going to happen. We don’t believe
the equivalence regime will operate as it does today
and will provide a backdoor to the single market,
but also, it seems that the concept of delegation of
contracts won’t be as easy as it would have been in the
past. Clearly if anyone wants to sell financial services
within the European Union to the 450 million custom-
ers with the pool of savings attached
to them, they will have to consider
relocating some of their operations
dedicated to this market. At the same
time we are trying to make sure the
banks and industry in London, which
will remain important, can contin-
ue to have access to the Euronext
platform as market participants just
like those in the rest of the world.
We believe London will remain an
important financial centre, albeit
structured differently in the way it is
today, but we will continue to grow
our operations in London. We are
in the process of hiring a new CEO
of Euronext London right now and
believe me I want to recruit a man
or woman with strong sales skills
and gravitas in the City of London
business community. So we are not
discounting our London operation -
on the contrary.
“Brexit cannot
be implemented
without any form
of fragmentation.
So in terms
of clearing, it
will mean
fragmentation of
liquidity”.
HM: How do you hope the future of
clearing will play out in Europe once
the UK leaves the European Union?
SB: What I know is that there is a
proposal on the table put forward by the European
Commission and they have told the UK “if Brexit does
not mean Brexit for clearing, then you can continue
to clear Euro-denominated assets in London - as long
as you abide with the rules applying to those in the
European Union and you accept the provision of the
European Central Bank”. But the Commission said
also “if Brexit does mean Brexit, even for clearing,
then those operations will be relocated to a legal
space that is consistent with the EU’s approach to risk
management”.
Frankly, I don’t know what the status of that debate
is within the UK because it is one component of a wid-
56 // TheTrade // Spring 2018
er British debate around the limits
of Brexit. I understand it is an
issue constantly debated amongst
EU leaders as well as within the
UK and it’s an issue that goes
far beyond the issue of clearing.
Therefore, I can’t really answer
the question because the answer
is in the wider debate that is up to
British democracy.
HM: What would the impact be if
clearing did leave London?
SB: There will be financial cost
- but you know what, Brexit is in-
curring costs everywhere. Big deci-
sions, big consequences, big costs.
It’s a dis-synergetic project. When
you break liquidity you create in-
cremental costs. There has been a
clear political choice to go towards
fragmentation, whatever the cost
is, so we shouldn’t consider there is
any way out of these fundamental
contradictions. Brexit cannot be
implemented without any form
of fragmentation. So in terms of
clearing, it will mean fragmenta-
tion of liquidity. However it’s up to
the leaders to make up their minds
as to the consequences for London.
What the final direction will be is
very unclear to me. In four months
time, two years after the referen-
dum it seems that still no funda-
mental choice has been made.
But I want to reiterate that
Euronext and Europe are well and
truly back. When you think about
when Euronext had its initial pub-
lic offering (IPO) in 2014 less than
four years ago, the market capital-
isation was €1.4 billion and today
it’s €4 billion. What this company
has achieved in terms of demon-
strating it can be independent,
its performance is truly amazing.
The recovery story since it became
independent is one of the defining
moments of the exchange group.