London Stock Exchange triggers no deal Brexit plan

The
London Stock Exchange.

REUTERS/Toby
Melville

• London Stock Exchange is triggering it contingency
  planning around a no deal Brexit.
• “The Group is executing contingency plans to maintain
  continuity of market function and customer service in the event
  of a hard Brexit,” the exchange said in a statement.
• The plans include creating new entities in the
  EU.
• London Stock Exchange Group also reported a 21% jump in
  profits in the first half of 2018.

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LONDON — Europe’s biggest single trading venue, the London Stock
Exchange, is putting into motion contingency plans for a no deal
Brexit for the UK.

It’s the latest sign that major financial institutions are
starting to worry that such an outcome is now a real possibility.

London Stock Exchange Group informed investors on Thursday that
actions are now being taken to ensure that if the UK does fall
out of the EU without a deal LSE’s markets can continue to
function.

“The Group is executing contingency plans to maintain continuity
of market function and customer service in the event of a hard
Brexit,”
the exchange said in a statement. “These contingency plans
include incorporation of new entities in the EU27 and
applications for authorisation within the EU27 for certain Group
businesses.”

The group also warned that the “complexity” of working out
exactly what a no deal Brexit will look like means that those
contingencies may end up not being effective. 

“The complexity and the lack of clarity of the application of a
hard Brexit may decrease the effectiveness, or applicability of
some of these contingency plans. As is the case with all change,
these contingency plans introduce some change management risk,”
the statement continued.

The group added that it has formed a “structured Brexit
programme” in which is it consulting with UK and EU policymakers
to “advise on financial market infrastructure considerations.”

That program’s key objectives are: “Maintaining London’s position
as a global financial hub and providing continuity of stable
financial infrastructure services.”

A “no deal” Brexit — whereby Britain leaves the EU without a deal
on future trading arrangements — is looking increasingly likely.
Last week, the
government admitted it is stockpiling food and
medicines in preparation for such an occurrence,
and Trade
Minister Liam Fox told Business Insider that Britain should
“leave without a deal” if one has not been secured by the end
of the Article 50 period.

News of the LSE’s Brexit contingency planning comes just days
after Germany’s biggest lender, Deutsche Bank, confirmed that it
will
move around half of its activities in the clearing of trades out
of the City of London, and to its headquarters in Frankfurt.
At the time of the news, a person with knowledge of the move told
Business Insider that it was down, in part at least, to Brexit.

Away from its Brexit contingency planning, the London Stock
Exchange reported a strong first half of the year,
with adjusted operating profit up 21% to £480 million ($628
million), thanks to strong growth in clearing, capital
markets and information services.

The results surpassed market consensus, which had forecast a £459
million ($600 million) profit.