The Art of the No Deal: How Best to Navigate Brexit for Financial Services

by Shearman & Sterling LLP
Contact

Shearman & Sterling LLP

It is hoped that, with Brexit on the horizon, the EU and UK will reach a new deal which preserves the ability of customers and financial institutions to continue their existing access rights. However, there is no certainty that this will be achieved. Financial services firms have been preparing for the fallback of a “no deal” alternative. It is important for firms and customers to take steps now to ensure that they are in a position best to continue providing and receiving financial business between the EU and London, whatever happens. Action taken now can avoid the need and expense of moving significant operations out of the UK. Various legal techniques can be used to minimise the need for such moves. With the following 10 steps[1] as a framework, UK businesses can prepare for different contingencies and provide their customers with the benefits of the most efficient possible access to capital from the global financial centre in this timezone, whatever the Brexit outcome.

10 Steps

  • Make a robust and thorough assessment of any perceived cliff edge issues for existing client relationships.
  • Make enhancements to existing relationships where possible (for instance by considering assignment clauses and reverse solicitation provisions where desired by the clients), so as to preserve and enhance those relationships post Brexit, allowing for future optionality—by amendments to contracts, side letters or email.[2]
  • Ensure business which comes in through reverse solicitation is properly documented and accepted so that the framework is robust.
  • Ensure a thorough analysis is made of what business is truly cross-border in law so that non-UK regulatory provisions are applied only when necessary, and consider whether, with minor adjustments, the EU’s regulatory perimeter need not be invoked at all.
  • Consider solutions for assisting customers in ‘coming to the UK’ in a low-cost way, for instance by establishing a small place of business here such that all future provision of financial service is purely domestic UK, and EU-facing activities are intra-group.
  • Consider other techniques for ensuring that regulatory provision takes place in the UK; for instance, the establishment of a trust to receive insurance policies and hold the benefit on trust for EU-27 customers.
  • Consider in detail individual business areas and the laws surrounding those areas to allow business moves to be minimised, for instance indirect clearing, agency arrangements, give-up agreements, delegation, outsourcings, branching back and reinsuring back into the UK from the EU-27.
  • Consider market-driven and infrastructure-based solutions, for instance UK infrastructure offering derivative or look-alike products which permit trading to continue in the UK in spite of any issues found in trading on EU-27 platforms.
  • Liaise with the UK Government on the introduction of possible tax incentives and regulatory improvements so as to optimise business models whilst ensuring they are safe for the UK, the global markets and the UK taxpayer.
  • Consider how to retain talent and jobs by assisting staff with any immigration approvals or other support needed to allow them to stay in the UK.

[1] In his latest book, ‘The Art of the No Deal—How Best to Navigate Brexit for Financial Services,’ published with Politeia, partner Barnabas Reynolds analyzes these steps further. To read the book, see ‘The Art of the No Deal—How Best to Navigate Brexit for Financial Services.’ Note that this is a personal publication of the author in such capacity and is not a publication of Shearman & Sterling LLP.

[2] You may like to see our client publication, “Continuity of Contracts and Business on a “Hard” Brexit: Human Rights and Reverse Solicitation to the Rescue!”—available here.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Shearman & Sterling LLP | Attorney Advertising

Written by:

Shearman & Sterling LLP
Contact
more
less

Shearman & Sterling LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.