In that event, the UK would officially have two years to negotiate its future relationship with the European Union. At one end of the spectrum lies a Norway-type situation. Here, in order to enjoy free trade in goods and services, the UK would adopt European regulations without helping to craft them. That would render Brexit largely meaningless. At the other end is an American-type situation in which the UK is outside the Union, enjoying greater autonomy, with free movement of goods and capital, but to be negotiated on a case-by-case basis. Anything in between these outcomes is possible, so the negotiations would be long and arduous. 

 

During this interim period, which could easily exceed two years, it is unclear how London-based 

financial institutions would be treated. In theory, firms with a European passport would still be able to offer products and services in the EU. The risk is that their constraints would be loosened, even though they would still have the same status. 

 

Thus the stakes are huge. Brexit is unwelcome, if only because continental financial markets do not stand to gain what London would lose. But one thing is sure: it is vital – and urgent – for Paris market participants to come together and discuss the implications for the French financial industry. But despite AMAFI’s repeated calls, little progress has been made. 

 

Brexit is not the only challenge that European markets currently face. With the planned merger of Deutsche Börse and the London Stock Exchange, stock market consolidation is on the move again, this time on a massive scale. The process may take a long time, and the Directorate General for Competition will play key role in it. The merger would raise numerous questions in addition to legal and trading aspects. In particular it would revive the debate about what model Europe wants for its market infrastructures. The risk is that in tomorrow’s markets, SMEs and intermediate size 

companies, which are locally-based, will fall victim to this clash of the titans.

 

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