It’s the topic we love to hate. Most of us are sick of hearing about Brexit but, at the same time, we want/need to know what May be going on (a fitting name for the PM to have during this era of uncertainty). And it certainly feels like a long time since the referendum results shook the nation in 2016…

Now, there are mere days until it’s the original deadline. So, what’s next on the agenda? How are asset managers coping? Is 22^nd May the new 29^th March? These are all questions we delve into below.

Up next on the uncertain agenda

Prime Minister Theresa May is in Brussels, meeting with the leaders of the European Union to discuss an extension to the Brexit deadline on 29^th March. As it stands, May wants the extended timeframe until 30^th June – but the EU officials are pushing for a faster turnaround. They’re coming back with 22^nd May. Is this long enough?

To be clear, a delayed Brexit is intended to offer ample time to come up with a better deal and potentially a second referendum. It’s not intended to be wasted by insisting upon a deal that has been rejected not once but twice by Parliament.

Ouch, May. That’s got to hurt.

Will she listen, continue to blame the lawmakers, or attempt to breathe new life into her previously negotiated withdrawal agreement? If the latter happens – the UK economy risks being thrown into jeopardy. A delay means more costs. However, if the delay is too short – like say, 3 months or less – what was the point in that? It’s a rock and a Hard-Brexit place.

We must also consider a growing support for May’s Dodo deal. It could still rise from the ashes against Speaker John Bercow’s ruling. If the alternative is a hard or no-deal Brexit – this may be a panicked, fire sale situation.

President of the European Commission, Jean-Claude Juncker, has shown his concerns by requesting an “emergency summit” due to “ongoing chaos in Theresa May’s cabinet”. This follows another type of delay happened, as May’s letter to request an extension to Article 50 did not get delivered on time.

Another ouch for May.

To look at this from another perspective – is this the Brexit the leavers wanted back in 2016? Not everyone thinks so. Therefore, if this is the case, is this not grounds for a second referendum?

What about a second referendum?

It’s not the most likely option to come out of all this uncertainty – even if its ironically backed by those who voted to leave and those who voted to stay. Nevertheless, this hasn’t stopped ‘stay supporters’ from tirelessly fighting its corner.

The pro-EU campaign group, Open Britain, held a demonstration at the weekend after the 12^th March update, which was aptly named: ‘Put it to the People’. Notably, the Labour party and the Independence Group have both declared their backing for another referendum too.

The question is – will the results significantly change if a second referendum gets the go ahead?

Well, a petition to revoke Article 50 received over 500,000 signatures, which caused the Parliament’s petitions website to crash, may be a start to a significant change. Despite this, Foreign Secretary, Jeremy Hunt, took to BBC Radio 4’s airwaves on the Today show to say that revoking Article 50 is “highly unlikely”. But, with the signatures surging to over 1 million, what say you?

In light of this, Oliver Williams’ piece in Forbes shows the number of ‘stayers’ has diminished:

“In January, YouGov, a pollster, found 47 percent of the 1,754 people it surveyed thought Britain was “wrong to vote to leave the European Union,” less than those that voted to remain in 2016”

So, has the drawn-out process and rising uncertainty made the public question their values or bolstered them? If the passion to protest has waned and atrophied, a second referendum won’t yield the results the nation is expecting.

How is the asset manager affected?

The London hub is over. Whether there is a delayed or no-deal Brexit – the UK is not the economical epicentre it once was. The issue of cost for financial institutions continues to be a major one, as budgets have been reallocated to set up and establish these new Europe-based sites for the sale and distribution of products.

So, what does this mean for the asset manager? New Financial’s latest report showed:

269 U.K.-based financial firms that have reacted to Brexit by setting up new hubs, moving staff or rebasing assets elsewhere in the EU

65 billion pounds ($85.2 billion) of portfolio funds that have been transferred out of the U.K

Remember when it was Brexit battle stations for asset management firms? Those days of hypothetically preparing are over. Since we published that piece back in August 2018, many organisations have since moved their offices and base of operations to Dublin to retain access to the EU market. Whereas banks have acquired EU licenses and opted for Frankfurt as their prime location.

Despite the hindrance that regulatory bodies are often associated with, the European Securities Market Association (ESMA) and the Financial Conduct Authority (FCA) have jointly limited issues surrounding delegation rights. This means that asset managers can market, sell, and manage funds from different countries. To make things even simpler, the UK and EU regulators have drafted agreements for both deal and no-deal Brexit eventualities.

That being said, these agreements are only temporary and will expire in approximately 2-years-time. When the cut-off happens, the EU could enforce a “third-country regime” which could potentially have detrimental effect on the delegation rights for the future.

In the meantime, firms in the very regions that were top of the asset managers’ relocation list – Dublin, Frankfurt, Paris, and Luxembourg – are circling the waters to gain a highly-lucrative market share and reap the rewards that Brexit is handing to them on a platter.

Will you be stockpiling your toilet paper like Wepa too?

Sources: Thomson Reuters, BBC News, Bloomberg, The Guardian & Forbes