How Does It Feel to Be a Third Country? The Consequences of Brexit for Financial Market Law

This paper analyzes options in financial market law available to British issuers, credit institutions, insurance companies, securities firms, and asset and fund managers in terms of Brexit, considering that the United Kingdom will become a third country from the perspective of the European Union. Whether London will continue to be the centre for European financial transactions will depend on its access to the Single Market. British companies will achieve market access via equivalence, by setting up a European subsidiary, through bilateral agreements and by passively using the fundamental freedom of services. The way to be taken will depend on the respective line of businesses and groups of customers. Nevertheless, even after Brexit, British companies will have to obey certain European laws if they want to maintain access to the Single Market. Moreover, future autonomous British law making will not be free from coordination with the Continent in order to ensure market access. Brexit will not impact all business models to the same extent; depending on the services offered, the clients served and the countries targeted, fundamental changes to the business model are to be expected (for example, a relocation of the European hub from London to the Continent, in particular in the banking and primary insurance markets), while, in other cases, the provision of services from London to the Continent may continue to function with few additional barriers, even in the status post-Brexit.