London-based LMAX, a multilateral trading facility for FX and one of the most recognizable names in the financial services industry & interbank currency markets, is mulling a move to Ireland in the event that Brexit negotiations fail to preserve single market and City passporting rights for financial firms in the UK:
“LMAX Exchange will begin regulatory filings in Ireland in January 2017, if no UK Government assurances are received.”According to the LMAX press release, the company would be forced to seek licensing in 22 European states, assuming passporting rights are revoked at some point, “The current uncertainty about the future of single market access for the City of London, means that UK-based firms, such as LMAX Exchange, an FCA regulated MTF and broker, have to seek regulation in EU states,” says LMAX.
David Mercer, CEO of LMAX Exchange, explained that many financial firms may choose to leave the UK for the EU, taking with them a significant portion of financial industry jobs, “Furthermore, lost capital markets revenue and associated taxation income could be catastrophic for the UK,” he adds.
LMAX’s stern warnings come two days after a Financial Times report revealed that Theresa May’s cabinet is considering plans to continue paying billions to the EU following Brexit to maintain passporting rights for British-based financial firms.
While the FCA-regulated LMAX has a presence in most global financial centers like Hong Kong, a loss of passporting rights to the EU would likely sever a quarter of the company’s clientele - a risk LMAX says it can’t take:
“The risk of losing access to 25% of the company’s current client base with one signature is significant and one that LMAX Exchange is protecting against - in the absence of any government or regulatory assurance or guidance.”