In a clever testament to personal resilience, Mark Twain, towards the end of his life, supposedly quipped, “The reports of my death are greatly exaggerated.” In the same humorous vein, many my age remember the line from Monty Python’s Holy Grail in which the peasant complains, “I’m not dead yet.” These remind us that there is sometimes a gap between rumor and reality of one’s demise.
London is a case in point. Since the Brexit vote in 2016 (can you believe it was 8 years ago), many surmised that the best days of London as a financial center were behind her. The financial engine of mainland Europe was now an outsider looking in and many predicted that Frankfurt, Paris or even New York would replace London’s role.
There is no doubt that Brexit has been a net loser financially for the UK. Experts say that London’s economy has shrunk by £30 billion and 290,000 jobs. There is no sugar-coating the impact this has had on London, but for a city nearly 2,000 years old, we must look to the positives in the long game.
Last week I was in London visiting FIA members and I came away energized and optimistic about the current and future state of this great city. The tube, the office buildings and the pavement outside pubs in the Square Mile and Canary Wharf were bustling if not downright crowded. The week culminated with a celebration event of the 40th anniversary of the FTSE Russell index at ICE’s offices near St. Paul’s Cathedral. London did not feel diminished at all.
It’s a reminder that our dynamic global economy does not follow the rules of the zero-sum game. Growth does not have to come at the expense of someone or something’s demise. London was a vibrant global financial center before joining the EU and it is now in the process of finding its footing after leaving the EU.
London still has the characteristics that made it so attractive to global finance in the first place: smart regulation, a central time zone, its common law framework, and an openness to business and markets. Specifically, the UK’s approach to regulation has always distinguished it from its peers.
While I was in London, FIA held a member forum on operational resilience to discuss the UK’s new rules that go into effect next year as well as the EU’s Digital Operational Resilience Act (DORA), which comes into force in January. In the wake of last year’s Ion incident, this is an extremely important topic for the industry, and these rules are critical to the resilience of our markets.
When reading the UK’s guidance, you are struck by the plain-language principles of the law. The UK lays out clear expectations for exchanges, clearinghouses, clearing members and critical vendors but avoids being too prescriptive in its approach. The focus is meant to be outcomes-based, leaving the means of achieving the principles to the market participants under the watchful eye of the regulator. This is in stark contrast to DORA, which has taken a more detailed, rules-based approach.
Both approaches may achieve similar results, but the principles-based approach of the UK allows for enhanced flexibility and nimbleness, important attributes for ever-evolving topics like cyber, AI and DLT. This is just one example of the UK coming back to its regulatory roots where it has historically served as a more outcomes-based regulator and an important and rational voice on improving market regulation globally.
Another indication that London is back is the new generation of leaders that are moving our industry forward. While in London, I attended the FIA European board meeting and many of the faces are new to their roles but not new to the industry. Their backgrounds tend to be more technical and operational as the industry trends more in that direction. Don’t get me wrong—there is plenty of the old guard left but it was nice to see a new generation of capable leaders beginning to stretch their wings. London and our industry will need their leadership.
I’m looking forward to being back in London on June 17-19 for the FIA IDX conference, which is our annual gathering to discuss the state of Europe and London specifically. Based on last week’s visit, it feels like London is pushing back against those that were predicting its demise. Clearly, London is not dead yet.
