- REUTERS/Toby Melville
- London Stock Exchange is triggering it contingency planning around a no deal Brexit.
- “The Group is executing contingency plans to maintain continuity of market function and customer service in the event of a hard Brexit,” the exchange said in a statement.
- The plans include creating new entities in the EU.
- London Stock Exchange Group also reported a 21% jump in profits in the first half of 2018.
LONDON – Europe’s biggest single trading venue, the London Stock Exchange, is putting into motion contingency plans for a no deal Brexit for the UK.
It’s the latest sign that major financial institutions are starting to worry that such an outcome is now a real possibility.
London Stock Exchange Group informed investors on Thursday that actions are now being taken to ensure that if the UK does fall out of the EU without a deal LSE’s markets can continue to function.
“The Group is executing contingency plans to maintain continuity of market function and customer service in the event of a hard Brexit,” the exchange said in a statement. “These contingency plans include incorporation of new entities in the EU27 and applications for authorisation within the EU27 for certain Group businesses.”
The group also warned that the “complexity” of working out exactly what a no deal Brexit will look like means that those contingencies may end up not being effective.
“The complexity and the lack of clarity of the application of a hard Brexit may decrease the effectiveness, or applicability of some of these contingency plans. As is the case with all change, these contingency plans introduce some change management risk,” the statement continued.
The group added that it has formed a “structured Brexit programme” in which is it consulting with UK and EU policymakers to “advise on financial market infrastructure considerations.”
That program’s key objectives are: “Maintaining London’s position as a global financial hub and providing continuity of stable financial infrastructure services.”
A “no deal” Brexit – whereby Britain leaves the EU without a deal on future trading arrangements – is looking increasingly likely. Last week, the government admitted it is stockpiling food and medicines in preparation for such an occurrence, and Trade Minister Liam Fox told Business Insider that Britain should “leave without a deal” if one has not been secured by the end of the Article 50 period.
News of the LSE’s Brexit contingency planning comes just days after Germany’s biggest lender, Deutsche Bank, confirmed that it will move around half of its activities in the clearing of trades out of the City of London, and to its headquarters in Frankfurt. At the time of the news, a person with knowledge of the move told Business Insider that it was down, in part at least, to Brexit.
Away from its Brexit contingency planning, the London Stock Exchange reported a strong first half of the year, with adjusted operating profit up 21% to £480 million ($628 million), thanks to strong growth in clearing, capital markets and information services.
The results surpassed market consensus, which had forecast a £459 million ($600 million) profit.