Daniel Carpenter, Head of Regulation at Meritsoft

With the possibility of a ‘no deal’ Brexit getting closer, alarm bells should be ringing for players in the research broker community, an expert in tax management has warned.
“With Brexit up in the air, European-based brokers may need to review their research contracts and agreements, not to mention fee structures, tax implications, budgets and invoicing activities,” said Daniel Carpenter, Head of Regulation at Meritsoft, a developer of digital tax management solutions. “All this leads to a mountain of contractual paperwork and implementation of new processes and procedures. However, getting to grips with post-Brexit bureaucracy is only part of a much wider problem for European research houses.”
The possibility of the UK being outside the European Economic Area (EEA) should raise questions about the interplay between a British-based research broker and its EU clients, he suggested: “The problem is, since MiFID II, the number of formal counterparty research agreements have increased tenfold for houses,” he added. “If the UK is not aligned 100% to the same rules and tax rates come March 29 2019, it is going to be much harder to work out and process accurate research invoicing and spend. Just as certain research brokers have got their MiFID II operational houses in order, along comes Brexit.”
Carpenter said that regardless of the Brexit outcome, research brokers need to prepare for all possible eventualities: “Sure, it is hard to say exactly how big the invoicing headache will be on every research item come 29th March 2019,” he concluded. “However, if transparency really means transparency under MiFID II and leave really does mean leave, perhaps they should arm themselves with the capabilities to track how much research is consumed and who has access to it.”

by Guy Matthews
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