With growing concerns over the possibility that the UK may leave the EU also known as Brexit, many consequences could impact many industries including Retail Forex Brokers. The idea of a referendum vote on EU membership came about when conservative parties like the UKIP (United Kingdom Independence party) were looking for a way to save the British taxpayer from the burden of EU membership and try and reverse mass immigration to the UK. Whether or not either of these would be accomplished is still up for debate. Some consequences are for sure like a steep drop in GDP and the likelihood of lost jobs some estimates are as high as 3 million jobs lost if an EU exit occurs.
There would also be a direct impact on banking and the financial services industry. Currently, there are over 250 Foreign banks in London many of which are the beneficiary of EU membership. Should the UK decide to exit the EU, many of these banks have already indicated that they will move their operations to locations like Ireland or other jurisdictions. For Forex Brokers the departure from the EU will also have an impact. Currently, the UK is part of the MiFID (Markets in Financial Instruments Directive) this allows FSA membership to passport to 27 EU member countries. This has been a significant reason the UK as a regulatory jurisdiction remains popular for Forex Brokers. The fact that they can offer their services to residents and citizens with approval from local regulators opens up their markets dramatically.
If the UK were to leave the EU would they maintain their MiFID status? A Brexit means that many regulations connected to the EU will be affected. Is it possible that leaving the EU would say that many Forex Brokers will seek out a new regulatory jurisdiction that gives them EU access? The UK has established itself as one of the top Forex regulatory jurisdictions. As many European regulators take a stricter stance on the solicitation of their citizens the results of the referendum could be felt for many years to come.