Brexit expected to accelerate Capital Markets Union, survey finds

BrexitOver half of financial firms (53%) believe that plans to establish a long-awaited EU-wide Capital Markets Union (CMU) will accelerate as a result of the UK’s departure from the 28 member trading bloc, according to a recent survey.

The research by Six Security Services, a Swiss financial infrastructure firm, also found that 4 in 10 organisations think that the creation of a CMU will provide a solution to collateral availability within two years.

Buy-side organisations are more optimistic than the sell-side with 53% of buy-side respondents saying that a CMU will solve the problem of limited availability of high-quality collateral “fairly soon”.

By contrast, 70% of sell-side respondents think that the roll-out of a CMU – an EU project that has been at the drawing board for several years – is unlikely to solve the problem in the short-term.

According to the report’s authors, a CMU is widely viewed as a possible solution to the problem of limited collateral as it would allow corporate debt to be distributed into the markets thereby alleviating collateral demand pressure – as already happens in the US.

Respondents were also asked whether they are preparing to shift a portion of their trading, clearing and collateral back into their respective currency zones post-Brexit.

The 45% of organisations that said they are envisage moving over half of their activities (53%).

Larger organisations, with assets of over $100 billion (€85 billion) under management, are most likely to move activity (61%), whereas only 38% of organisations with assets of under $50 billion are planning to move some trading activity.

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