We have all woken up on June 24th to the surprising news that the UK has voted to leave the European Union following a contentious referendum. The vote was very close, with 52% voting to leave and 48% voting to remain. Markets are reacting with volatility, as might be expected, and British Pound Sterling values have sunk overnight to a historic 30 year low against the dollar. To add to the turmoil, David Cameron, the British Prime Minister, has announced that he will be stepping down with his successor to be in place by the October Conservative Party conference.
That said, nothing is going to happen immediately. There is a very specific legal process for Brexit and the timeline is hardly swift. As the first step, the UK has to give notice to leave under Article 50 of the Lisbon Treaty. Based on the Prime Minister’s announcement this morning and questions surrounding who might lead the negotiations on the terms of the UK’s exit from the EU, that notice may not be given for many weeks, if not months. That notice is also just the commencement of the process. Once notice has been given, there is then a two year period in which to negotiate the terms of an exit Treaty.
Our colleagues have posted more details on the Brexit process on Bryan Cave’s EU & Competition blog.
The mood here in London has morphed from “Dazed Disbelief” to the traditional “Stay Calm” approach that Londoners have long adopted whenever there is turmoil. Here is the statement issued today by the UK Financial Conduct Authority (FCA):
On 23 June, the UK voted to leave the European Union (EU). This has significant implications for the UK.
The FCA is in very close contact with the firms we supervise as well as the Treasury, the Bank of England and other UK authorities, and we are monitoring developments in the financial markets. Much financial regulation currently applicable in the UK derives from EU legislation. This regulation will remain applicable until any changes are made, which will be a matter for Government and Parliament.
Firms must continue to abide by their obligations under UK law, including those derived from EU law and continue with implementation plans for legislation that is still to come into effect. Consumers’ rights and protections, including any derived from EU legislation, are unaffected by the result of the referendum and will remain unchanged unless and until the Government changes the applicable legislation.
The longer term impacts of the decision to leave the EU on the overall regulatory framework for the UK will depend, in part, on the relationship that the UK seeks with the EU in the future. We will work closely with the Government as it confirms the arrangements for the UK’s future relationship with the EU.
We know that many of our banking, fintech and payment systems clients will have additional questions. We are planning a webinar with our London Regulatory team next week (more details to follow) and you will have an opportunity to have your questions answered at that time. In the meantime, Stay Calm and enjoy your weekend!