Exclusive: Worst case Brexit could create "wall" to financial data exchanges notes IT & coms provider

Jonathan Boyd
Exclusive: Worst case Brexit could create "wall" to financial data exchanges notes IT & coms provider

The storage and transmission of data critical to the functioning of both high frequency traders as well as long only fund managers could face a "wall" should there be a worst case scenario stemming from a no deal Brexit, according to a warning issued by global IT and communications provider TransWorldCom's sales and technology leadership team.

In an exclusive interview with InvestmentEuorope, Paolo Sartori, managing director, and Richard Baker, operations director (pictured below), started by saying that so far, the EU has not extended the same 'Adequacy Agreement' to the UK as it has previously done with other states such as Norway and Switzerland for purposes of data management. While there is mention of maintaining data standards in the so called Draft Agreement that UK prime minister Theresa May has thus far spectacularly failed to pass through Parliament, this only applies to a transition period covered by that Agreement.

Paolo Sartori
Richard Baker

From TransWorldCom's perspective it is "not pressing the panic button yet", but given the types of services in which it engages, including ensuring low latency to facilitate trading in financial markets, there is a concern given the implications for UK businesses seeking to access European markets post Brexit, and vice versa.

Some customers may have direct access to markets and exchanges, therefore secure low latency, but similarly there is a need for "EU and the UK government to agree before Brexit happens" in order to avoid stoking the concerns that hitherto could be attributed to "scaremongers", Sartori and Baker said.

There is a need to consider how data will be transferred post Brexit, including in which direction it will be provided. For example, it is not encumbent on cloud services providers to keep data close to the customer unless specified; it may be close but may not be. The question then is how quickly can the data be provided. If it is stored in the UK, this may be less of a problem for a UK company, but what if it is stored in the EU, the US or Australia? What hoops would the service provider or the data itself need to jump through if the data were stored in the EU?

Additionally, the "wall" may not just be about data on servers, Sartori and Baker warn, but also about telecommunications providers, which run the networks on which the data is transported.

"What if European carriers cut all ties to the UK? What if carriers are not allowed to carry data?"

Another aspect is the people actually employed. For example, some data centre workers may be employed inside the EU, others outside. There are still questions on whether some of them would be required to relocate post Brexit.

GDPR raises other questions that need answering, Sartori and Baker add. For example, there will be questions on where the data is stored and how quickly it can be found in cases where, under GDPR and data protection rules, a person wishes to be "forgotten"; what are the implications of Brexit if the data is located in different places and there is a requirement to find it.

Prepare for the worst, hope for the best

Given the level of uncertainty around how data, especially personal data, may be processed post Brexit, Sartori and Baker compare the situation to that of the so called Millennium Bug. There was a lot of doom and gloom and money spent, but ultimately nothing happened. However, what if that money had not been spent and something had happened. 

Anecdotally, TransWorldCom (https://www.transworldcom.com/ ) has seen an uptick in requests from clients about how to set up storage going forward. While the requests might not be framed specifically in reference to Brexit, Sartori and Baker note that the implication is that companies are looking at their data options precisely because they are concerned about the unknown outcomes.

For those who, say, rely on the largest public cloud suppliers and networks, although their size and scale predicates the ability to initiate searches for data quickly in response to regulatory demands, there may be a disconnect between starting the search and finding the data as it could be stored anywhere.


But for businesses that have gone the route of, say, UK private clouds providers, it may be different as these should be able to quickly bear down on data to the individual SAN disk level located within the UK.

Next steps

Further certainty may or may not be provided by the vote expected to take place in the UK Parliament on Tuesday 29 January.

Possible developments include adoption by the House of the Draft Agreement with the EU unchanged; amendments that could lead to a second referendum; adoption of a delay, which would have to be agreed to by the EU27; or even annulment of the Article 50 process and unilateral withdrawal from the Brexit process.

According to Oddschecker on Monday 28 January, the odds on withdrawing from Brexit were 9/1.

For a second referendum, the odds were 9/4, with 1/2 against.

Odds were 1/2 that prime minister Theresa May would exit her role in 2019, suggesting a regime change could occur in the UK at the same time as regime change in EU institutions in the wake of the European elections scheduled for May 2019.


Jonathan Boyd
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Jonathan Boyd

Editorial Director of Open Door Media Publishing Ltd, and Editor of InvestmentEurope.