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Brexit to Mean Fewer Jobs for CFA Chartered Investment Professionals in the UK?

Posted on August 24, 2016 10:00 am;

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By John Alexander Adam


Brexit, the term coined to refer to the UK’s potential disentanglement from EU-membership is, as of the

June 23 rd referendum, now a reality in motion. With 51.9% of the electorate of the United Kingdom of

Great Britain and Northern Ireland voting in favor of the country relinquishing its status as a member of

the EU, it is accepted that at some point over the next several months the UK’s government will officially

invoke Article 50 of the Lisbon Treaty. This will officially trigger the process of the UK’s voluntary

withdrawal from the EU. While no one really knows at this stage how the upcoming negotiations will

shape the new relationship between the UK, the EU and the rest of the world, it is almost certain to have

a major impact on the future nature of trade relationships and agreements. One major British industry set

to be particularly affected by Brexit is financial services and its City of London hub. As such, the

international financial industry and its vanguard of CFA-accredited investment professionals is watching

nervously to see how the Brexit fallout impacts business volumes, and therefore jobs, in the UK’s financial

services sector.


City of London to Lose EU Trade?

While the City of London was certainly a major international finance and trading hub before the existence

of the EU, the world has changed immeasurably over the intervening decades. It is far from certain

whether London can maintain capital volumes passing through its banks and other financial institutions in

the present day, without free access to EU markets.


The EU operates a ‘passporting’ system for financial institutions, which means banks and other financial

services providers can conduct activities across the member-states of the EU from a base in any other.

Over the decades since the formation of the EU, London built upon its initially strong position to become

the locale of choice for global financial institutions doing business across the entirety of the EU.


The City of London’s status as the world’s central hub for the trading of the euro, a market turning over $2

trillion a day, looks to be in particular jeopardy. Last year the ECB failed in a move to stop clearing

houses not located within the Eurozone from handling wholesale euro transactions. The move was

blocked by the European Court of Justice, protecting London’s dominance of the market, a decision

widely considered to have been heavily influenced by the UK’s status as a member of the EU, despite not

being a part of the Eurozone. Any new post-Brexit attempt by the ECB to table a similar motion is unlikely

to meet the same level of resistance and would likely succeed.


London to Relinquish its Crown as Europe’s Primary Employer of CFAs?

Aside from the euro trading market, international banks such as HSBC and JP Morgan have already

intimated that the UK no longer being a part of the EU’s passporting system would negate the logic of

them employing so many staff in London. Roles directly connected to EU markets would have to be

relocated to EU member states with alternative financial centers such as Paris, Frankfurt and Dublin likely

to be amongst the main beneficiaries of such relocation.


With 11% of The City’s financial services professionals coming from other EU member states, any change

in freedom of labor laws post-Brexit would also inevitably result in a brain drain of EU talent no longer

able to easily work in the UK. This would also make London a less attractive base for international



It is expected that job locations would be fragmented between different European bases rather than one

city taking over a dominant role. However, a domino effect of such fragmentation would likely be financial

institutions being less inclined to necessarily base other positions dealing with international non-EU trade

in a London office no longer considered as the European HQ. Some observers have predicted that such a

fragmentation of Europe’s financial services industry would have the knock on effect of it being less

competitive internationally across the board.


International Migration of CFA Jobs – Where Will They Go?

The result of all of the above would be a fanning out around the globe of many of the positions for CFAs

currently concentrated in the City of London. Other European capitals would likely become host to

positions dealing directly with EU markets. What would happen to positions dealing with other

international markets based in London is less clear. Financial institutions may yet decide to keep all or a

part of those positions based in London but for those who don’t the main beneficiaries would likely be the

other established and developing financial hubs. Singapore and Hong Kong in South-East Asia, New

York and the developing financial services industry in the Middle East in cities such as Dubai, would

expect to stand to gain from London’s loss.


Can London Retain Its Position?

The extent to which the potentially seismic changes to the UK’s financial services sector outlined above

come to pass will largely be shaped by negotiations between the UK and the EU over the months and

years after Article 50 is officially invoked. If the UK were to seek to adopt a model mirroring Norway’s and

apply to join the EEA and gain EFTA membership, existing pan-EU regulatory frameworks governing

financial services would remain in place along with the passporting system. This could mean that

London’s position with the international financial services industry would remain largely unchanged.


Alternatively, a UK-EU free trade agreement would give the UK freedom to create its own regulatory

framework for its financial services sector. This would likely result in a patchwork model where some UK-

EU financial trade would remain as currently is with other parts restricted. Pro-Brexit voices have opined

that this kind of arrangement would allow a part of EU-trade focused positions to remain viable as

London-based, with lighter regulation making London a more attractive location for other kinds of jobs

than it is at present.


Time Will Tell

Like the rest of us, London-based CFAs will be finding it hard to as of yet predict the eventual outcome of

Brexit on the British economic and trade model in general, and specifically how that will impact the

financial services industry that is their employer. Until Article 50 is triggered, negotiations get underway

and the UK and the EU outline their positions on how they see their future partnership taking shape we’ll

all, CFAs included have to watch and wait to see how the international FS industry will be reshaped.


Aspiring CFA charterholders can take preparatory courses and their CFA

exams from Level I to III with Morgan International. For further information, please contact us!

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