Beyond the obvious choice

Many trading firms are looking towards multi-entity setups to prepare for Brexit. The larger firms tend to have subsidiaries or branches in place, so they already have a flexible hedge against any Brexit scenario. Unfortunately, this can be an expensive contingency plan. What if a firm can’t justify the additional costs either due to limited exposure to the EU/UK or because it lacks the overall scale?

For these firms there are alternatives. For example, a local national third country regime can provide access to a specific country without the EU-wide passport. If firms want access all over Europe, they might want to consider employing an intermediary, i.e. removing themselves one step away from the client or exchange. Or, if firms have only a few clients spread all over Europe, they might rely on reverse solicitation where the client initiates the provision of the service on their own initiative, and is therefore excluded from MiFID II. None of these options is without its limitations but, depending on the specifics of the business, there are choices for those not looking to rely on the multi-entity setup.