Darwinex & Brexit, once again
We hoped for far more clarity on Brexit than we have, but it’s time to explain the options for Darwinex.
At the time of writing, there’s 3 potential scenarios, ranked in descending severity.
- Hard Brexit
- May’s “deal”
Why Brexit matters
Darwinex is the trading name of Tradeslide Trading Tech. We’re regulated by the UK’s Financial Conduct Authority (FCA) as:
- A full license brokerage that can deal with retail, as well as professional clients, and
- An asset management license to offer DARWINs to the same clientele.
As a UK entity, we currently leverage “MiFID passports” to service EU and EEA customers. Brexit could affect none, some or all those passporting rights – which is why we’re writing this post.
“Crashing” out of the EU will not sink the UK in the Atlantic
Neither will Brexit sink your Darwinex funds, they will continue to enjoy:
- The FCA supervisory framework,
- GBP 50.000 deposit insurance from the FSCS,
- GBP 500.000 excesss cover by Lloyd’s of London.
Furthermore, there’s no agenda restricting capital flows between the UK and the EU. Which means you will continue to have control over where you send your monies:
- EU residents can trade with Australian regulated brokers, and
- EU residents can trade with off-shore regulated brokers, and thus
- EU residents will be able to trade with FCA-regulated brokers.
The EU will not force you to trade with EU-regulated brokers. Reverse solicitation will apply, nothing will stop EU customers from engaging UK entities.
The Brexit question mark then is – will UK entities keep permission to engage EU customers? If yes, how?
In a nutshell, Brexit (even Hard Brexit) will
- NOT affect existing customers – the FCA will continue to regulate the relationship.
- NOT affect any non-customers reading this post – they engaged Darwinex unsolicited.
- Affect the way Darwinex proactively markets to prospective customers.
Given our very limited (if any) outbound marketing, we expect little to no short-term impact.
Every other Brexit scenario
Given the farce Brexit has become, we’ll quote a Member of Parliament who summed it up: “F*ck knows“.
For our part, we’ve had it with the uncertainty, and will:
- Keep our FCA license no matter what – London remains key to our institutional expansion
- Potentially secure EU regulation depending on if there’s a Brexit (may well not be one!) and if Brexit results in Darwinex losing passporting rights.
Work to deliver the vision – we’ve wasted enough time as it is.
We appreciate there’s plenty of uncertainty, but there’s little more we can add to the above at this stage.
Feel free to ask – we’ll do our best to explain our stance on the matter.