# Brexit will accelerate evolution of Capital Markets Union (CMU).
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2017-10-11
Category: FINANCE
Category URL: https://financedigest.com/category/finance
Meta Title: Brexit Impacts: CMU Plans Accelerating with Over Half of
Meta Description: New research from SIX Securities Services reveals how financial organisations are viewing the potential impact of Brexit on the Capital Markets Union, shedding
URL: https://financedigest.com/brexit-will-accelerate-evolution-of-capital-markets-union-cmuhtml

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_According to the latest survey conducted by SIX Securities Services, over half of organisations (53%) questioned believe plans for a Capital Markets Union (“CMU”) will speed up in the wake of Brexit._

The question as to whether euro-clearing will remain in London after Brexit has been at the centre of Brexit negotiations since the vote to leave Europe was cast in 2016. Aside from the question mark hovering over this issue, new research from [SIX Securities Services](http://www.six-securities-services.com/) reveals that financial organisations appear to have broader concerns.

Over half of financial organisations across Europe (53%) believe that CMU will evolve faster due to Brexit, and 4 in 10 organisations think that it will provide a [solution to collateral availability within two years](https://www.financedigest.com/geospatial-solution-market-one-of-the-most-booming-industry-in-upcoming-years.html "Geospatial Solution Market One of the Most Booming Industry in Upcoming Years"). Buy-side organisations are more optimistic than the sell-side – 53% of buy-side respondents believe this development will solve the problem of limited available high-quality collateral ‘fairly soon’, while 70% of sell-side respondents think that such a [solution will not present](https://www.financedigest.com/product-design-verification-and-validation-solution-market-2021-present-scenario-and-growth-prospects-2025.html "Product Design Verification And Validation Solution Market 2021 | Present Scenario and Growth Prospects 2025") itself in the short term. One reason as to why the CMU is being viewed as a possible solution to this problem is that it will enable the [European Commission](https://www.financedigest.com/ftx-collapse-shows-urgent-need-to-finalise-eu-crypto-rules-says-european-commission.html "FTX collapse shows urgent need to finalise EU crypto rules, says European Commission") to distribute corporate debt into the markets, much like the US model, thereby alleviating collateral demand pressure.

Respondents were also questioned as to whether they are preparing to shift a portion of their trading, clearing and collateral back into their respective currency [zones post](https://www.financedigest.com/euro-zone-posts-record-trade-deficit-in-august-amid-soaring-energy-prices.html "Euro zone posts record trade deficit in August amid soaring energy prices") Brexit. Of the 45% of organisations that said they are, they envisage moving over half of their activities (53%). Larger organisations, with assets of over $100 [billion under management, are most likely to move activity (61%), whereas only 38% of organisations with assets of under $50 billion are planning](https://www.financedigest.com/uk-orders-housebuilders-to-come-up-with-5-billion-plan-to-remove-cladding.html "UK orders housebuilders to come up with billion plan to remove cladding") to move some trading activity.

**According to Thomas Zeeb, Division CEO, SIX Securities Services**, “I believe the principles and intent behind CMU make good economic and commercial sense longer term for the EU. As to whether Brexit will actually accelerate CMU, on this point I’m less convinced. Capital will [move to a location where the market](https://www.financedigest.com/the-next-upcoming-years-to-see-the-dental-biomaterial-market-move-exponentially-upwards.html "The Next Upcoming Years To See The Dental Biomaterial Market Move Exponentially Upwards") can best make use of it quickly and efficiently.  In this regard, I don’t see the EU as the only option.

“Global firms will also [evaluate other locations based on their specific business](https://www.financedigest.com/truic-evaluates-the-biggest-business-incorporation-companies-in-the-us.html "TRUiC Evaluates The Biggest Business Incorporation Companies in The US") models, including potentially New York, Singapore or even Switzerland. There appear to be increasing strains on EU unity, and I think that both the UK and EU should be deeply concerned about this. The movement of specific functions such as trading out of the UK is to my mind potentially misleading.  Financial services is now such a [global business](https://www.financedigest.com/bhp-in-talks-to-sell-global-oil-gas-business-to-australias-woodside.html "BHP in talks to sell global oil, gas business to Australia’s Woodside") that I think the location of the delivery of services will be based on where the best and most qualified people can be found.  This know-how and these resources cannot be replicated that easily elsewhere.”


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