#planb accessing the european market

#PlanB – Accessing the European marketBrexit from an infrastructure provider perspective

London

12 June 2018

1

The EU and the UK are strongly interlinked

Deutsche Börse Group

British-

European

relations in

numbers

EU AND UK FINANCIAL

MARKETS ARE STRONGLY

INTERLINKED

► The UK financial market

acts as a wholesale hub for

other EU financial centres

and accounts for up to 80 %

of EU activity in financial

market segments.6

DEMOGRAPHY

► In 2015, 3.2 million people living in the UK were

citizens of another EU country.1

► Around 1.2 million British live in the EU27 in 2015.1THE EU IS THE UK´S MAJOR

TRADE PARTNER

► In 2016, the UK covered

approximately 51 % of the

imports from the EU.2

► 48 % of British exports

(goods and services) went in

2016 to the EU. 3

► From the EU view, trade with

the UK in 2015 turns off just

16 % of the EU-good exports.

Vice versa the EU imported

240 milliard pounds in UK

goods in 2016.4

► The UK gained 16 % of the

complete EU GDP in 2016.5

1 http://www.europarl.europa.eu/news/de/headlines/eu-affairs/20170505STO73508/brexit-schutz-der-rechte-von-eu-burgern-im-vereinigten-konigreich2 http://ec.europa.eu/eurostat/tgm/refreshTableAction.do?tab=table&plugin=1&pcode=tet00036&language=de3 https://www.dai.de/files/dai_usercontent/dokumente/studien/2017-02-28%20Positionspapier%20Brexit%20Deutsches%20Aktieninstitut.pdf4 https://www.dai.de/files/dai_usercontent/dokumente/studien/2017-02-28%20Positionspapier%20Brexit%20Deutsches%20Aktieninstitut.pdf5 https://www.destatis.de/Europa/DE/Thema/RegionalesThemenuebergreifendes/Brexit_Bremain.html6 According to the FESE European Equity Market Report 2016 around 54 % of the European equity trading was executed in UK. The UK handles 77 % of euro-denominated derivatives transactions, according to the Bank

for International Settlements data on over-the-counter trades. Around 78 % of European FX trading, 74 % of European interest rate derivatives trading and 50 % of European fund management activities (by assets) take

place in the UK.

http://www.europarl.europa.eu/news/de/headlines/eu-affairs/20170505STO73508/brexit-schutz-der-rechte-von-eu-burgern-im-vereinigten-konigreich

http://ec.europa.eu/eurostat/tgm/refreshTableAction.do?tab=table&plugin=1&pcode=tet00036&language=de

https://www.dai.de/files/dai_usercontent/dokumente/studien/2017-02-28 Positionspapier Brexit Deutsches Aktieninstitut.pdf

https://www.dai.de/files/dai_usercontent/dokumente/studien/2017-02-28 Positionspapier Brexit Deutsches Aktieninstitut.pdf

2

Agenda


► Current status of the Brexit process

Potential impact on financial markets2

1

Deutsche Börse Group in the Brexit landscape3

Brexit information4

Outlook5

3

Countdown to Brexit

Jan

2018

Jan

2019

Apr July Oct 29 Mar

2019

2017

Last feasible date for a

draft Brexit deal

October 2018

Vote on Brexit deal at:

- European Parliament

- UK Parliament

- EU27 Parliaments

end 2018 – early 2019

TODAY

12 June 2018

Negotiations

19 June 2017 –

October 2018

Ratification

October 2018 –

29 March 2019

Time remaining = less than 1 year

3

Unconfirmed

transitional period

29 March 2019 –

31 December 2020

?

31 Dec

2020

4

Even with an agreement on the withdrawal issues, the outcome

of the negotiations is still uncertain


6 WTO: World Trade Organization7 EEA: European Economic Area

“There should be very little

difference between the

standards and regulations in

the U.K. and the EU

immediately after Brexit.”4

[26 January 2018]

“Nothing is agreed until everything is

agreed.”2

[10 April 2018]

Theresa May,

Prime Minister of the

United Kingdom

David Davis,

Secretary of State for

Exiting the EU

“[…] I believe Brexit is one of the

saddest moments in 21st-century

European history. In fact, sometimes I

am even furious about it.”5

[10 April 2018]

“We have the chance, now, to

create a new dynamic in the

talks to work together to

explore workable solutions - in

Northern Ireland, in our future

security cooperation and in

order to ensure the future

prosperity of all our people.”1

[22 March 2018]

1 https://www.reuters.com/article/us-britain-eu-may/seize-on-new-dynamic-to-agree-brexit-deal-may-tells-eu-idUSKBN1GZ05H 2 http://delano.lu/d/detail/news/nothing-agreed-until-everything-agreed/1731933 https://mobile.reuters.com/article/amp/idUSKCN1J42044 https://www.politico.eu/article/david-davis-middlesbrough-speech-uk-wants-to-stay-in-eu-trade-deals-during-transition/5 http s://www.reuters.com/article/us-britain-eu-tusk/furious-about-brexit-tusk-calls-for-eu-unity-from-dublin-idUSKBN1HH2WJ

Softer

Brexit

Hard

Brexit

Cliff-edge Brexit

Keeping close ties with the EU One model

of a soft Brexit could be the so-called Norway

option – being a member of the EEA7 and

staying in the single market.

Leaving the EU single market

Trading with the EU would be based

on WTO6 rules and third-country

regimes.

Michel Barnier,

European Chief Negotiator

for the United Kingdom

Exiting the European Union

Donald Tusk,

President of the

European Commission

“"Companies are well advised to

prepare for the worst-case scenario as

well (…) there is no guarantee that this

overall agreement will be reached,

though we are working hard on it".”3

[11 June 2018]

Olaf Scholz, German

Finance Minister

http://delano.lu/d/detail/news/nothing-agreed-until-everything-agreed/173193

https://www.politico.eu/article/david-davis-middlesbrough-speech-uk-wants-to-stay-in-eu-trade-deals-during-transition/

5

Agenda


Current status of the Brexit process

► Potential impact on financial markets2

1


Brexit information4

Outlook5

6

Third-country rules are no substitute to the EU passport and will have

a great impact financial markets


Leaving the EU single market means that the UK would be considered as a third country and UK-based

financial firms would lose their EU passporting rights1.

Third-country rules (TCRs) for financial services are incomplete and can be withdrawn by the EU.

They do not provide appropriate substitute long-term solutions for UK-based financial firms.

UK-based firms are considering to establish a subsidiary in EU27 in order to make use of the passporting rights.

Even though UK’s regulatory regime is currently “exactly” the same as EU’s, there still is uncertainty as the decision

to give third-country recognition is ongoing, forward-looking and will take into account the risk of larger

financial activities passing out of the European supervisors’ direct control.

Market InfrastructuresTCRs for cross-border services

Banking and related servicesTCRs for cross-border services

Trading Venues Investment services

Systematic Internalisers Banking services (e.g. deposit taking, lending,

payment)

CCPs Fund management & marketing activities of

AIFMs

Trade repositories UCITS fund management

CSD services Provision of benchmarks

Data reporting services

Prospectuses

?

1 Passporting rights make it possible to conduct financial services on a cross-border basis throughout the entire EU.

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Agenda




1

► Deutsche Börse Group in the Brexit landscape3

Brexit information4

Outlook5

8

Listed

FX spot and

derivatives

Cash securities,

bonds and ETFs

Listed

derivatives OTC derivatives Commodities

Clearing

Settlement

and

custody

Collateral

management

Trading

Pre-IPO

Regulatory Reporting Hub

Market Data + Services

Transaction cost analysis

Funding and

financing

Repo &

Securities

Lending

Repo & GC

Pooling CCP

SecLending CCP

GFF

N/A

Un-cleared Cleared

OTC

Deutsche Börse GroupEntire value chain is affected by Brexit

(Futures only) N/A

Other listed

derivatives

Outsourcing platform, IT services

Group

via partner

for OTC

uncleared

N/A

Externally

provided

Cleared Un-cleared

Index Services Regulatory Services

Others

Data Services

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How Deutsche Börse Group is preparing for Brexit?


Deutsche Börse Group has set up a dedicated Brexit Transition Team to help its customers deal

with the changes and uncertainty surrounding Brexit.

The Transition Team analyses all aspects of Brexit, potential implications for Deutsche Börse

Group´s customers as well as how this will affect Deutsche Börse Group´s own set up vis-à-vis

its clients.

Brexit Transition Team

The Brexit Readiness Project was set up to ensure continued segments readiness from group

level perspective for all relevant group markets and products as well as continued client access.

The project’s purpose is to maintain continued access to our customers currently located in the

UK in a post-Brexit world.

Brexit Readiness Project

Last year, Eurex Clearing introduced a partnership program to develop a EU27 based alternative

for OTC Interest Rates Derivatives clearing.

Eurex Clearing partnership program

10

Agenda




1


► Brexit information4

Outlook5

11

Where to find Brexit information on our website


On the Group’s dedicated Brexit website all relevant updates are published.

In the menu, you will be able to find a Brexit member readiness sub-section.

http://deutsche-boerse.com/dbg-en/regulation/regulatorytopics/reg-topics-brexit

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13



14


Brexit questionnaire


A first tab provides

guidelines on how

to use it and fill it

out.

In the second tab,

you will find the

questionnaire:

Part I

Part II (optional)

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Agenda




1


Brexit information4

► Outlook5

16

Brexit makes finding a sustainable vision for EU financial

markets key… … to ensure stability, efficiency and a level playing field


How to ensure

stable EU financial

markets?

EMIR Review and

CCP Recovery and

Resolution

No Financial Transation Tax

(FTT)

True EU-27 Capital Market

required

MiFID Review / Recalibration

How to increase

competitiveness of

EU capital

markets?

and

European Supervisory

Authorities (ESAs) Review

Favourable environment

Implementation of

G20 Agenda

Capital Markets Union

(CMU)

Economic and Monetary

Union (EMU)

CRD IV/CRR

…

How to ensure supervision of

systemic important infrastructures?

How will definition of liquid markets

work with third country venues?

How to ensure efficient allocation

of resources across EU?

How to ensure fair, stable and

open market access for EU27

market participants?

How to make EU attractive for

non-EU investors and issuers?

How to ensure that EU does not

end with letter box banks?

Thank you for your attention!

Italo di Lorenzo

Government Relations

E-Mail: [email protected]

Phone: +352 243 3 26 06

#planb accessing the european market

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