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BREXIT: What happens now to EU residents trading via FCA brokers?

  • #1
  • First Post: Edited 4:18pm Jun 25, 2016 1:25pm | Edited 4:18pm
Brexit is a fact, so what happens now to millions of Euro traders trading with FCA regulated brokers?

For years, European traders have flocked to the FCA because it gave us the highest level of regulatory standards.
After the Brexit vote, the UK will most likely lose it's "EU Financial Passport", if it's not a fact already after the remarks by EU leaders this morning.
For those of you not familiar with what this means:
http://www.financialexpress.com/arti...sports/286882/

From the sequence of events since the referendum results were official, it's clear both from the UK and EU sides, we have NO IDEA what will happen. This increased uncertainty of course, goes against the whole point of going for an FCA broker in the first place.

CySec, Malta, Caribbean regulated brokers....sorry, but rather not.

So, what options do European traders have?
Which German, Dutch, French, Luxembourg, Irish, regulated FX brokers can we turn to in times like this?


NOTE: I'm not planning or suggesting that I will close my FCA regulated broker accounts; I would just like to know what options do European traders have, if in fact, the UK loses its EU Financial Passport or anything along those lines.
  • #2
  • Jun 25, 2016 1:51pm Jun 25, 2016 1:51pm
FCA is not going away?, brokers still have to be regulated by FCA if they want to operate within the borders of UK right?
not sure I understand your concern here, besides that, UK is the next largest economy in Europe, I am sure they would not be left out of deals abroad even though they left the EU, there is just to much money to be made for that to happen, there have been a lot of scare propaganda before Brexit, and it sounds worse than it actually is, leaving EU is a great thing for UK, and it will boost their economy incredibly the following years. EU will probably and should be dismantled in the years to come, hopefully more and more members will jump on the train to leave EU, Denmark have promised they would leave if UK leave, so we will see what happens with that.
Bulls are stupid Animals!especially when Im short!
  • #3
  • Edited 2:13pm Jun 25, 2016 1:56pm | Edited 2:13pm
Quoting roughtrader
FCA is not going away?, brokers still have to be regulated by FCA if they want to operate within the borders of UK right? not sure I understand your concern here, besides that, UK is the next largest economy in Europe, I am sure they would not be left out of deals abroad even though they left the EU, there is just to much money to be made for that to happen, there have been a lot of scare propaganda before Brexit, and it sounds worse than it actually is, leaving EU is a great thing for UK, and it will boost their economy incredibly the following...
Hi roughtrader,

I think you misunderstood the question.
Did you read the article? Do you understand what happens to the "free trade" of financial services from the UK to Euro traders? If you don't want to go through the whole article, in a nutshell, this is it (excerpts from the link above):

"....The City of London vies with New York as the world’s biggest financial centre in part thanks to the automatic right to sell services across the 28-nation bloc with low costs and a single set of rules under a system known as passporting, industry and European officials said......
Asked by Reuters what would happen in case of a Brexit after the June 23 referendum, French Finance Minister Michel Sapin said: “There will be no passport, or that would have to be negotiated against a lot of reciprocal concessions.”

Germany, France, Luxembourg and Ireland would all be vying to pick up business from London in areas such as investment banking, clearing and settlement and fund management.

EU membership gives Britain access to what effectively is a “financial Schengen zone” – a single set of rules that allows banks, including many U.S. and other non-European institutions, to operate freely across the bloc’s borders.
Just as the 26-nation Schengen area, which Britain has never joined, permits citizens to travel without border formalities, the single market allows lenders, fund managers and investment firms to operate EU-wide without different national rules and controls.
Britain is the biggest beneficiary as UK-based banks and investment firms play a key role in European financial markets for derivatives, foreign exchange, cross-border bank lending, asset management and insurance services.
...."


That's what the questions is about, hope it's a bit clearer.

Cheers
  • #4
  • Jun 25, 2016 3:04pm Jun 25, 2016 3:04pm
In the long run difficult to say what will happen, but probably as for now will not change nothing

https://www.leaprate.com/2016/06/fca...al-regulation/
  • #5
  • Jun 25, 2016 4:06pm Jun 25, 2016 4:06pm
Quoting corre71
In the long run difficult to say what will happen, but probably as for now will not change nothing https://www.leaprate.com/2016/06/fca...al-regulation/
Hi corre71, very interesting article. This is exactly what I mean...it's very uncertain (and this type of uncertainty doesn't seem to have -at least for now- the possibility of an upside). If you are in the UK and you trade under an FCA broker, one would assume nothing changes (?), BUT for residents of the EU trading via an FCA broker....no one can say anything definite yet like your article also states.

Hence the idea of looking for a proper EU based Forex broker, from a proper EU regulatory authority (not Cyprus, Malta).

Search continues...
  • #6
  • Jun 25, 2016 4:45pm Jun 25, 2016 4:45pm
Its going to be difficult for UK brokers to service EU retail clients (ECP and professional will have no problems). Paris and Frankfurt have ambitions to become the new London on the continent, and they won't just give UK firms access to the common market that easily. There is no upside for EU to do so, and, after all, UK voted Out so it seems they dont really value the common market access that much anyways.
  • #7
  • Jun 25, 2016 5:09pm Jun 25, 2016 5:09pm
Quoting shrike
Its going to be difficult for UK brokers to service EU retail clients (ECP and professional will have no problems). Paris and Frankfurt have ambitions to become the new London on the continent, and they won't just give UK firms access to the common market that easily. There is no upside for EU to do so, and, after all, UK voted Out so it seems they dont really value the common market access that much anyways.
I'm afraid that you are right shrike. I can imagine that scenario is now a very strong possibility.
  • #8
  • Edited 6:10pm Jun 25, 2016 5:53pm | Edited 6:10pm
As far as looking for an EU based FX broker (with EU regulation that is not CySec or Malta) for EU residents, this is what I have so far:

 

  1. AVA Trade


I guess it doesn't get more solid than a National Central Bank regulation:

http://www.avatrade.com/about-avatrade/regulation

European Union (regulation for Ava Trade)

"....AVA Trade EU Ltd is incorporated in Ireland and is regulated by the Central Bank of Ireland. (Reference No.: C53877) AVA Trade EU Ltd is a licensed investment firm compliant with the Markets in Financial Instruments Directive (MiFID). MiFID provides a harmonised regulatory regime for investment services within the European Economic Area. It increases efficiency and financial transparency and offers greater consumer protection in investment services. ....."

 

  1. Varengold Bank FX


https://www.varengoldbankfx.com/en/c...nd-regulation/

Regulated by BaFin (Germany) "....Varengold Bank AG is registered at the Federal Financial Supervisory Authority under no. (109 520) 100 and published on the website www.bafin.de. ...."

  • #9
  • Jun 25, 2016 6:03pm Jun 25, 2016 6:03pm
If i can't trade with a UK firm anymore i would probably go to Interactive Brokers (USA, SG or HK i dont know yet).
  • #10
  • Jun 26, 2016 12:48am Jun 26, 2016 12:48am
Quoting meyoik
Brexit is a fact, so what happens now to millions of Euro traders trading with FCA regulated brokers? For years, European traders have flocked to the FCA because it gave us the highest level of regulatory standards. After the Brexit vote, the UK will most likely lose it's "EU Financial Passport", if it's not a fact already after the remarks by EU leaders this morning. For those of you not familiar with what this means: http://www.financialexpress.com/arti...sports/286882/...
Continue to trade with FCA regulated brokers!! The Brexit is actually a good thing for traders. Now those brokers who were really regulated by less stringent regulatory bodies like CySec cannot hide behind their tag-along FCA license to con traders to gave them money based on their shiny FCA badge without knowing that those brokers are in fact still only being regulated by the lax CySec regulations. And traders actually have to do research to distinguish between genuine FCA license and "fake" ones. Now with Brexit, no more tag along. All those brokers in EU will be regulated in their respective regulatory body and will be judged as such and brokers in UK will continue to be regulated by the REAL FCA.
Make your losses in demo. Earn your profits live.
  • #11
  • Jun 26, 2016 1:08am Jun 26, 2016 1:08am
Quoting shrike
If i can't trade with a UK firm anymore i would probably go to Interactive Brokers (USA, SG or HK i dont know yet).
I don't think any UK firms will kick you out just because you are an EU trader outside of UK. There is no reason to; they will lose business. EU, however might choose to punish UK for leaving by restricting its non-UK residents to only trade with brokers that are regulated by regulatory bodies in EU member countries only. I can see that happening.
Make your losses in demo. Earn your profits live.
  • #12
  • Jun 26, 2016 2:00am Jun 26, 2016 2:00am
For sure no UK Fca regulated broker will kick out Eu customers. In some years can happen (but is only a possibility) that EU to punish UK for the leave, will force Eu traders to trade only with EU regulated brokers. This can be pushed by some big Eu countries trying to attract trading activity formerly London based. At the actual stage most of EU regulated brokers are regulated by Cysec, which only check if papers are OK but no real check if Cyprous brokers cheat is made, and most of them cheat and act heavily on their feeds to fight profitable traders
Honestly my favourite brokers are Asic Au regulated, but i must say that anyway Fca UK gives much more guarantees to traders. The only thing i hope will never happen is that Eu customers will be forced to trade only with Cysec or similar crappy regulated brokers.
  • #13
  • Edited 11:18am Jun 26, 2016 11:08am | Edited 11:18am
Quoting meyoik
{quote} Hi roughtrader, I think you misunderstood the question. Did you read the article? Do you understand what happens to the "free trade" of financial services from the UK to Euro traders? If you don't want to go through the whole article, in a nutshell, this is it (excerpts from the link above): "....The City of London vies with New York as the worlds biggest financial centre in part thanks to the automatic right to sell services across the 28-nation bloc with low costs and a single set of rules under a system known as passporting, industry...
I understand what you mean, but what I'm saying, don't worry about it, it's just scare propaganda from the leftists. the UK is a to large economy,
to much money to be made, for all parties, it isn't going to happen, ever! EU can't force anything on UK after they left,
because they would have no control over Britain anymore. UK will be a sovereign country again, Hurray!
Bulls are stupid Animals!especially when Im short!
  • #14
  • Jun 26, 2016 11:30am Jun 26, 2016 11:30am
Quoting roughtrader
{quote} I understand what you mean, but what I'm saying, don't worry about it, it's just scare propaganda from the leftists. the UK is a to large economy, to much money to be made, for all parties, it isn't going to happen, ever! EU can't force anything on UK after they left, because they would have no control over Britain anymore. UK will be a sovereign country again, Hurray!
We'll see, the tone this whole story has taken leaves many with a lot of questions.

I am hoping EU traders can keep on trading under the same conditions in the future with/via FCA UK Brokers as we do now.
  • #15
  • Jun 26, 2016 3:22pm Jun 26, 2016 3:22pm
Rough is correct, sovereignty returned.

In the meantime we hope to emulate Norway, who likewise maintain their sovereignty, they have their laws adhere to EU regulations in order to maintain access to the EU market - including free movement of EU citizens.

Right at home, on the question of FCA regulation, the push will be to move from the UK, three contenders are Dublin, Paris and Frankfurt, likely winner will be Dublin.

One tiny example, an international company who service the compliance sector had to make a decision, they are EU domiciled but there has been some pressure to open in the UK and become FCA regulated, they decided to wait the outcome of the vote.

This business is about the future, investors seek growth, maybe that will be in the UK, or maybe in the EU, or maybe both, if level heads persevere then hopefully neither gets left behind - in the meantime all FCA regulations are based on EU law:

http://www.insuranceage.co.uk/insura...er-brexit-vote
  • #16
  • Jun 26, 2016 5:19pm Jun 26, 2016 5:19pm
Quoting shrike
If i can't trade with a UK firm anymore i would probably go to Interactive Brokers (USA, SG or HK i dont know yet).
Umm plenty of firm in Australia offering great leverage and regulation but wouldnt panic just yet .
  • #17
  • Jun 26, 2016 5:36pm Jun 26, 2016 5:36pm
Quoting meyoik
Brexit is a fact, so what happens now to millions of Euro traders trading with FCA regulated brokers? For years, European traders have flocked to the FCA because it gave us the highest level of regulatory standards. After the Brexit vote, the UK will most likely lose it's "EU Financial Passport", if it's not a fact already after the remarks by EU leaders this morning. For those of you not familiar with what this means: http://www.financialexpress.com/arti...sports/286882/...
Do nothing.
We havent seen this EU played out in full yet.
For all we know the whole EU thing could disintegrate in 12 months and we go back to individual nations.
You can of course look at Australian brokers if you are overly concerned and they will be stable. They operate similar to the FCA guidelines under ASIC regulation without the EU concern.
  • #18
  • Jun 27, 2016 3:33am Jun 27, 2016 3:33am
I highly doubt that EU will disintegrate in the next 12 months. Too many people with a lot of power profit too much from the EU being as it is to allow that to happen that easily. As for the FCA, they made a statement that nothing will change for the time being. The results of the referendum were shocking and they caused a lot of drama on the market, but from a legal point of view the UK hasn't even begun the process of leaving the EU yet, and the process itself could take months, even years. Whatever legislation changes get introduced - if they get introduced - we will see them coming and we'll be able to react appropriately on time, so I wouldn't worry just yet.
  • #19
  • Jun 27, 2016 8:22am Jun 27, 2016 8:22am
One important question remains whether or not the FCA compensation scheme will still work for EU residents. Say for instance if Alpari had defaulted after the Brexit would its retail clients still be covered for their funds by the FCA?
  • #20
  • Jun 27, 2016 8:49am Jun 27, 2016 8:49am
Quoting actalis
One important question remains whether or not the FCA compensation scheme will still work for EU residents. Say for instance if Alpari had defaulted after the Brexit would its retail clients still be covered for their funds by the FCA?
The FCA doesn't do compensations, its the FSCS. And yes, even non-EU residents will get compensation. By the way, this is in contrast to for example Australia, where only residents are eglible. And also certain other EU compensation funds are useless (i know the one in Austria is for sure).
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