The currency market is liquid and the measure of liquidity is influenced by providers; higher liquidity drives down the spreads and the cost of trading. Reliable liquidity providers lead to a reliable FX service and having a panel to work with means that moneycorp can source a range of exchange rates to find the best available for each client at any given moment.
In addition, working with a panel of providers means that we are able to offer our clients great rates and excellent service on every transaction.
Will Brexit have an impact on liquidity?
Uncertain geopolitical situations like Brexit can have an impact on the liquidity of the market, which puts pressure on prices. Liquidity gets thinner during volatile times and in the case of Brexit this is accompanied by systemic challenges.
If the UK leaves the EU without a deal and no alternatives in place, there may be some fragmentation of transaction reporting between the UK and the EU.
Such challenges and the current lack of regulatory guidance are putting pressure on liquidity and this could mean an increase in prices. However, by working with our panel of providers, we are able to navigate such choppy waters. As providers seek to overcome industry-wide challenges, they will be innovating and working hard to compete and our clients can benefit from that.
Are there other issues to consider relating to Brexit?
There has been a lot of focus on the value of the pound during Brexit uncertainty and this certainly has the most immediate impact on businesses and individuals. However, behind the scenes there is more to the story.
In addition to the challenges that liquidity providers face, there are considerations that investment may be deferred until trading arrangements between the UK and the EU have been established. Security is another major area; reduced transparency and information sharing may lead to security risks that will need to be addressed.
In July this year, the FCA confirmed its intention to extend the duration of the directions it had issued under the temporary transitional power (the 'TTP'). This empowers the FCA and PRA to make transitional provisions in the event of a no-deal Brexit so as to ensure a minimum disruption in the UK financial markets and is currently in place until 30th October.
How does moneycorp help to address these challenges for FX transactions?
As a currency specialist, we keep up to date with the latest requirements and challenges in relation to Brexit and other major issues which impact global payments. Our team work closely with partners and providers to provide a valuable service to our clients.
We know that the priority for our clients is to endure and protect the value of their global payments. From securing great rates via our panel of liquidity providers to maintaining the security of accounts while transitional arrangements are made, the moneycorp team works hard behind the scenes to ensure the quality of our service. This means that when we’re working with clients, we can offer solutions and services that work for businesses looking to navigate through a challenging time in global trade.