Yesterday, June 23, the United Kingdom held a referendum on its future in the European Union (EU)—the “Brexit”. The result this morning shows that 51.9% of voters in the UK want the UK to cease being an EU Member State. Prime Minister David Cameron has since declared that he will be stepping down from his role and that his successor should be in place by autumn. The financial markets have already experienced significant shocks from the Brexit vote; following the vote, the FTSE 100 fell dramatically and Sterling fell significantly against the US dollar and against other major currencies.
Although the Brexit decision will create significant legal uncertainty, it is unlikely that there will be any changes in the short term: a contract that was enforceable yesterday will be enforceable today, and the UK’s financial services regime, including EU directives and regulations, remains in place until further notice. Under EU law, the UK has two years from the date of a formal notification of its decision to withdraw from the EU before the UK ceases to be an EU member state, so there will not be any legal changes for some time yet. However, during this period, the UK has to negotiate with the other 27 EU member states as to how the country will leave the EU. For the time being, the UK position remains uncertain. Katten has issued an advisory summarizing key Brexit implications for financial services firms and sets out practical points that firms may wish to consider.
To read the advisory in its entirety, click here.