Stock markets in Europe were mixed as the formal process of Brexit began this week.
Reuters noted Wednesday (March 29) that British Prime Minister Theresa May is sending notice via letter that after 44 years the country is leaving the European Union, which virtually ensures that there will be, as the newswire termed it, “years of uncertain negotiations.” And in addition, in another wrinkle of politics and referendum and fraying of a fabric of European economic unification, the Scottish Parliament has given the nod to a second independence vote that could disunite the United Kingdom itself.
The British FTSE Index was down 0.4 percent in the morning on Wednesday, with German DAX up 0.4 percent and France’s CAC market up around 10 basis points.
With the Article 50 letter proffered by May, the formal process is under way. The prime minister said that she desires a “deep and special partnership” with the EU, as noted by The Guardian, and that phrase was repeated roughly seven times, as the U.K. accepts that there can be no “cherry picking” amid the rules that govern how the U.K. firms might trade with EU member nations.
And amid the back-and-forth over just how Brexit will shape up over the next few years, the European Banking Federation (EBF) has nudged regulators in the U.K. and across the continent to help offer insight and direction illuminating just how financing in an altered economic landscape might work. The EBF has the input from 32 nations and their respective financial associations and, per Reuters, includes 4,500 banks. The EBF has said it wants to help explain just what will happen to banks and other financial services firms as regulations take shape.
“The EBF is keen to see clarity and certainty for banks during this process so that the banking sector can continue financing the economy while serving customers to the fullest extent and without undue disruption,” said the EBF in a statement Wednesday.
Across the pond, U.S. stocks opened a bit less sanguine. Just at the start of trading, all three major indices were down, with the tech-heavy NASDAQ off about seven basis points. No slump to be sure, but it bears watching, especially among bigger banks.
For with the starting gun that is the letter penned by May, the overriding question for FinTech and financial services is how they will react to rules and processes and money flows (and worker flows!) yet to be determined. Early indications are that bigger financial players in the EU are establishing some beachheads in the U.K., as Deutsche Bank said that it would open up a new office in London.
Elsewhere, the partnerships between the U.K. government and its various agencies that nurture and prod FinTech innovation, along with burgeoning partnerships with bigger banks within the U.K. itself may prove difficult to dislodge, whether the passporting issue hobbles a natural extension of business beyond certain borders. A joint report from PWC and Startupbootcamp has determined that the U.K. is unlikely to lose its crown as FinTech’s capital. For one thing, change might grind exceedingly slow.
As far as Brexit is concerned, the bated breath can be unabated, at least a little, at least for now and at least in stages. So begins the great change.