AMSTERDAM (Reuters) - The Dutch financial markets authority (AFM) said on Monday it was preparing for a 20-fold increase in financial trading taking place on its infrastructure in the event that Britain leaves the European Union in March with no deal in place.

The AFM said that while banks are shifting operations to Frankfurt and Paris, and asset managers to Luxembourg and Dublin, trading houses are converging on the Netherlands as an alternative to London after Britain leaves the bloc.

“While border and customs negotiations are attracting attention, there is a fairly invisible shift taking place in European capital markets,” it said in a statement.

“The AFM is conducting conversations with more than 150 parties that are interested in a (Dutch trading) license.”

AFM Chairwoman Merel van Vroonhoven said she expected 30-40 percent of European trading in financial instruments will wind up being housed in the Netherlands, making it the center of EU financial trading. </s> FILE PHOTO - British and EU flags are seen prior to the arrival of British Prime Minister Theresa May and European Commission President Jean-Claude Juncker, ahead of the European Union leaders summit in Brussels, Belgium October 17, 2018. REUTERS/Francois Lenoir

AMSTERDAM (Reuters) - The Dutch financial markets authority (AFM) said on Monday it was preparing for a 20-fold increase in financial trading taking place on its infrastructure in the event that Britain leaves the European Union in March with no deal in place.

The AFM said that while banks are shifting operations to Frankfurt and Paris, and asset managers to Luxembourg and Dublin, trading houses are converging on the Netherlands as an alternative to London after Britain leaves the bloc.

“While border and customs negotiations are attracting attention, there is a fairly invisible shift taking place in European capital markets,” it said in a statement.

“The AFM is conducting conversations with more than 150 parties that are interested in a (Dutch trading) license.”

AFM Chairwoman Merel van Vroonhoven said she expected 30-40 percent of European trading in financial instruments will wind up being housed in the Netherlands, making it the center of EU financial trading. </s> "The arrival of these companies will attract other service providers and strengthen the access of Dutch pension funds and other asset managers to the financial markets," AFM Chairwoman Merel van Vroonhoven said on Tuesday said, as quoted by the Dutchnews.nl portal.

READ MORE: UK Chancellor Raises Brexit Funding to $2.5 Billion, Claims Austerity's No More

Van Vroonhoven expects that the Netherlands may host up to 30-40 percent of European financial instruments trading after Brexit.

In June 2016, the United Kingdom voted to leave the European Union. Although Brexit is scheduled for late March 2019, London and Brussels still cannot agree on a number of key issues, including the Irish border and customs arrangements, making a no-deal scenario a possibility.

In July, Catherine McGuinness, the chairperson of the policy and resources committee of the City of London, said that the UK financial sector could lose up to 12,000 jobs due to Brexit because many financial companies were relocating their businesses to the European Union. According to the Bank of England estimates, the City may lose as many as 5,000 jobs by late March 2019, when the United Kingdom is set to withdraw from the European Union. </s> The banking industry have been asked to prepare for a "hard" Brexit in a PwC report titled, Planning for Brexit — Operational impacts on wholesale banking and capital markets in Europe. It aims to provide policymakers and industry experts information on how to handle Brexit, as well as addressing some of the likely challenges that the financial market will face.

A spokesperson for AFME has confirmed that Brexit will be a highly complex transformation for wholesale banks.

"Firms will need to execute Brexit transformation programs which will extend beyond Article 50 timescales and in many cases up to three years after Brexit has been completed; or even longer, if the post‐Brexit trading relationship between the EU and UK remains unresolved," a spokesperson for AFME told Sputnik.

The UK parliament entered a second day of debate on Wednesday, February 1, as to whether Britain should trigger Article 50, the two-year process by which the country leaves the European Union.

​Sources close to the UK government say that the likelihood of the bill being passed is high, given the fact that the Labour and opposition leader Jeremy Corbyn has ordered party MPs to vote for triggering Article 50 under the threat of being sacked.

Once Article 50 is triggered it then allows for the negotiation process to start. Given that the UK PM Theresa May has already expressed a preference for a "hard" Brexit, the financial sector and businesses in the UK must be prepared for the outcome.

​Banks based in London have five years overall to prepare and submit documents and business models, however most banks, if not all, are working towards a two-year plan, that will keep them in line with Article 50 regulations.

A spokesperson for AFME said that when banks execute their transformation programs, they will be heavily dependent upon a timely approval process of licenses by their new EU regulators.

According to AFME, banks are currently proceeding with a two‐year tactical plan to maintain continuity of service. However, these plans are likely to change, as an agreement of a new business model needs to be reached with EU regulators, who will have to approve it before the UK leaves the EU.

"Banks need to submit, as soon as possible, the structure of any interim business models that may be deemed acceptable immediately post‐Brexit," a spokesperson for AFME told Sputnik.

The banking industry has been in limbo since the EU referendum, as a result certain banks have decided to leave the UK. According to Anthony Browne, the chief executive of the British Bankers' Association, major banks are considering leaving the United Kingdom in the first quarter of 2017, while small banks plan to start relocations before Christmas.

​"For banks, Brexit does not simply mean additional tariffs being imposed on trade — as is likely to be the case with other sectors. It is about whether banks have the legal right to provide services," Browne said, as quoted by the Observer.

A "hard" Brexit would deprive the country of the access to the EU internal market and the customs union, which could potentially result in tariff and non-tariff restrictions. </s> LONDON (Reuters) - Global banks must plan for a “hard” Brexit or risk breaching regulatory requirements and disrupting business, according to an industry report seen by Reuters, the first since Prime Minister May said she would take Britain out of the single market.

A sign for Bank Street and high rise offices are pictured in the financial district Canary Wharf in London October 21, 2010. REUTERS/Luke MacGregor

Banks’ transformation programs are so complex and lengthy that in some cases they may need to devise two-step interim contingency plans in order to mitigate the risks of disruption, the report says. It was prepared by consultancy PwC for industry body the Association for Financial Markets in Europe (AFME).

The process will require more clarity from regulators in EU countries where banks might seek a new base and need approval of any interim business models, the report says, noting the lack of visibility on future trading relations between Britain and the EU with negotiations yet to begin.

“The report, ‘Planning for Brexit – Operational impacts on wholesale banking and capital markets in Europe’ aims to provide policymakers and other industry stakeholders, both in the EU27 and the U.K., with a fact-based analysis of how these challenges are likely to affect the financial services industry,” a spokeswoman for AFME said in an emailed statement.

The report analyzed information garnered from 15 banks of varying sizes and from different home regions on their Brexit planning measures and also looked at 8 case studies of banking transformation programs in the past that have taken longer than 2 years.

The findings offer stark reading on what lies ahead for banks as they attempt to devise strategies to cope with any impending disruption to their business once Britain leaves the European Union, mapping out 25 key business activities that will be impacted from staffing to establishing new legal entities.

Several major banks have already warned that they will each have to move thousands of jobs to another EU country in order to continue providing services to European clients once Britain leaves the bloc, after Prime Minister Theresa May said that Britain would leave the single market.

Banks are already implementing “no regrets” contingency measures such as retaining legal entities, the report finds.

In order to adapt to the post-Brexit landscape banks will need to set in motion a wide range of interacting transformation programs ranging from restructuring legal entities, gaining regulatory approvals, connecting to new market infrastructure and moving staff to new locations.

Some banks’ contingency plans will be achievable within two years whilst others could take at least 4 years to implement, depending on their current European footprint.

A transition period of 3 years would alleviate some of the pressures posed in implementing the necessary changes as well as support from regulators in Europe to speed up license approvals and to avoid any uncertainty that could lead to duplication costs and avoidable disruptions. </s> It could take European Union banks up to five years to overhaul their operations and acclimatise to a new post-Brexit trading landscape, according to a new report commissioned by the Association for Financial Markets Europe (AFME).

While yet to be fully released, the report, conducted by PwC, features interviews from 15 AFME members, some of the world's largest investment banks, and is thought to be the most in-depth analysis of the future of the EU banking industry since the U.K.'s shock Brexit vote.

It suggests that it could take banks up to three years or more to transition to a new business environment. This is on top of the two-year negotiation period scheduled once the U.K. triggers Article 50 and formalises its intent to leave the EU.

The report garners feedback from banks spanning a range of sizes and activities and covers an even split of EU27 headquartered, UK headquartered and non-EU headquartered banks. </s> LONDON, March 21 — Asset managers and other financial firms from the European Union have only a week to register with UK regulators to continue operating in Britain in the event of a no-deal Brexit, a senior regulator said today.

British Prime Minister Theresa May is in Brussels today in a bid to seek a short extension to the scheduled March 29 Brexit Day.

Nausicaa Delfas, executive director of international at the Financial Conduct Authority, said notifications from EU firms who want to continue serving UK customers must be received by March 28, the eve of Britain’s scheduled departure from the bloc.

Delfas said over 1,000 EU financial firms have notified the watchdog that they want to make use of Britain’s “temporary permissions regime”.

This allows them to continue operating in Britain for up to three years if Britain fails to secure a Brexit deal with Brussels, giving them time to apply for a new licence.

UK regulators have said that 8,000 “passports” are held by inbound or EU firms operating in the UK, meaning there are more applications likely in coming days.

“Notifications must be submitted by the end of 28 March 2019, just a week away,” Delfas told a conference in London. — Reuters </s> A merger that would have created a huge new stock exchange business in Europe has been killed off.

The European Union's competition watchdog said Wednesday it was blocking the deal between the London Stock Exchange (LDNXF) and Deutsche Boerse (DBOEF).

The European Commission said the deal "would have created a de facto monopoly" in an important part of the financial markets related to bonds and debt.

The London Stock Exchange and Deutsche Boerse both said they regretted the decision.

"A rare opportunity to ... strengthen the global competitiveness of Europe's financial markets has been missed," said Joachim Faber, chairman of the supervisory board at the German firm.

The two exchanges have made multiple attempts in the past to combine their operations.

Deutsche Boerse had also planned a tie-up with the NYSE Euronext in 2012, but that too was blocked by the European Commission.

The latest deal, which was announced in February 2016, was billed as a "merger of equals." It was expected to build a powerful link between Europe's premier financial centers. London is a global center for banking and insurance, while Frankfurt hosts the European Central Bank and the finance hub for the German economy.

The European Commission's top anti-trust official Margrethe Vestager said the companies didn't offer enough concessions to guarantee there would be sufficient competition in the market after a merger.

The London exchange had refused the Commission's request to sell its MTS bond-trading platform, arguing that the divestment would cause various problems, including damaging its business in Italy.

Shares in the London Stock Exchange jumped by about 3% after the announcement. Shares in Deutsche Boerse were also edging up by about 0.5%.

The announcement comes on the same day that the U.K. has begun the two-year process of extracting itself from the European Union, a bloc of 28 nations with free trade and virtually open borders. The U.K. voted in June 2016 for Brexit.

Vestager said Brexit was not a factor in her decision to block the deal. </s> Germany's financial regulator is hosting more than 20 banks to set out guidelines for setting up shop in Frankfurt following Brexit.

Bafin has brought together 50 representatives from those lenders for a full-day workshop addressing growing interest in shifting operations to the city following Britain's divorce from the EU.

The invite-only event - held at Bafin's Frankfurt office - is understood to have drawn major US banks including Goldman Sachs.

It has recently played down reports that it could cut London staff by half to around 3,000 and organise transfers to New York and to a new subsidiary in Frankfurt.

Citigroup and Morgan Stanley were also set to attend, according to reports.

Citigroup, which employs around 9,000 UK staff, is looking to shift its broker-dealer business to the EU, but will make a decision over the coming months.

All three banks declined to comment.

Representatives from the European Central Bank and Bundesbank were also reportedly at the event. Neither confirmed their attendance.

Global lenders, including JP Morgan and HSBC, have said that parts of their businesses would be moved from the City in response to Brexit and Prime Minister Theresa May's decision to rule out single market membership.

It means UK-based banks are likely to lose passporting rights - which allow financial services to trade freely within the EU's single market - and raises the possibility that London will lose out to rival EU financial centres such as Dublin, Amsterdam, Paris and Frankfurt.

HSBC has said it is on course to move 1,000 jobs from its London office to France, while around 4,000 of JP Morgan's 16,000 UK staff could be shifted abroad.

Barclays is eyeing a number of EU cities as part of Brexit contingency plans, and could end up bulking up its Dublin offices as a result.

However, it is not clear whether London jobs would be moved, or if new staff would be hired.

The British Prime Minister said she held "positive" talks with bank bosses and business chiefs after a trip to the World Economic Forum in Davos, Switzerland, earlier this month, insisting that her vision of a "global Britain" would keep posts in the UK.

However, Goldman Sachs chief executive Lloyd Blankfein reportedly "talked tough" in his meeting with Mrs May and said there was no reason why European financial centres would not emerge as "effective rivals" to London, according to the Financial Times, citing sources.

Earlier this month, Mr Blankfein said New York is already gaining from Brexit as the US bank pulls back on previous plans to shift operations to Britain.
AFM, the financial markets authority in the Netherlands, says it will prepare for financial trading taking place on its infrastructure in the event the United Kingdom leaves the European Union.