ISDA Forum: Brexit Negotiations Should Avoid “Brinksmanship”

Regulators at the ISDA conference in Singapore expressed concern about the uncertainty surrounding Brexit negotiations, but were cautiously optimistic about the potential for major Asian jurisdictions to suffer minimal impact in its transactions with both the EU and the UK.

A fireside chat with regulators from the US, Singapore and Australia ended on a positive note even as regulators continued to watch out for the market impact of uncertainty in negotiations over Brexit.

At the ISDA Industry and Regulators Forum in Singapore on 13 September, CFTC (Commodity Futures Trading Commission) chairman J. Christopher Giancarlo said he was “very concerned” about “brinksmanship” in Brexit negotiations where both parties sought to delay negotiations as much as possible. He said that the uncertainty was bad for markets and any sudden move in prices or volatility could “wreak havoc” for unhedged positions.

Giancarlo said that a lack of consensus on third party clearing or EU passporting when the world’s largest OTC clearinghouse, LCH, was based in London was another area of concern for the CFTC. He added that the CFTC’s proposed reform of cross-border clearing rules would potentially remove some of the complexity that the financial industry was facing.

Lee Boon Ngiap, assistant managing director of the capital markets group at the MAS (Monetary Authority of Singapore) said that the central bank was in regular dialogue with the UK Treasury. He said that the UK-Singapore Financial Dialogue, which is in its fourth year, recently touched upon Brexit discussions and its impact on cross-border financial regulation and market access.

“Both sides committed that Brexit would not affect transactions between the UK and Singapore. I am fairly confident with the outcome of the dialogue,” Ngiap added.

He further said that the MAS had just begun engagement efforts with the EU and that he was “cautiously optimistic” about the development of that relationship.

ASIC (Australian Securities and Investments Commission) commissioner Cathie Armour concluded that Asian jurisdictions should focus their efforts on increasing international participation and present a united voice on the world stage. The takeaway for Asia from Brexit, she said, should be to ensure a seamless transition regardless of the result of the negotiations.

“We need to conduct global business seamlessly. That is the most important story for the EU and the UK, a soft or a hard Brexit notwithstanding,” she said.

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