Britain and the European Union are getting closer to a cooperation agreement on financial regulation later this month in a move that could help companies in the city of London have more access to the single market.
According to someone familiar with the negotiations, the EU could grant the UK the so-called partial regulatory equivalence for some financial products once the separate memorandum of understanding on financial regulation has been reached.
While the two issues are formally separate, ensuring a common framework around certain financial services rules could help unblock some limited equivalence decisions that allow British companies to access the wider EU market, the person, who asked not to be identified in private matters. The EU and Britain would retain their unilateral right to grant or retract these equivalence resolutions.
The two sides have been negotiating a memorandum of understanding since January on regulatory cooperation in financial services. The latest draft now includes requests for both parties to remain informed about their tax plans for the financial industry, as well as about efforts to combat money laundering and terrorist financing, according to another person familiar with the matter. .
“We are in a good place around the memorandum of understanding,” Mairead McGuinness, the blog’s financial service commissioner, said as he spoke to a group of journalists in Brussels on Wednesday.
The European Commission and the UK Treasury declined to comment on the ongoing negotiations.
Northern Ireland
While MOU talks are well under way, ongoing disagreements over Northern Ireland are mounting post-Brexit tensions, which could affect equivalence decisions, another The EU official said this week. A dispute the supply of vaccines has also increased tensions between the two sides.
The MOU, which is expected to be agreed by the end of this month, calls for a joint forum to discuss regulations and share information and includes provisions for informal consultations on decisions to adopt, suspend or withdraw equivalence.
So far, this separate equivalence process has been fragile. The UK has been increasingly frustrated by the EU’s reluctance to grant resolutions that would allow London-based financial companies to operate on the bloc, while Brussels is concerned about the reforms proposed by the UK in the your book of financial rules. The lack of agreement has jeopardized London’s dominance of European finances for decades.
Read more about equivalence
McGuinness said Tuesday at a conference that equivalence decisions will be resumed once a memorandum of understanding has been established. He stressed that the process is separate and that it depends on the UK complying with the rules of the bloc.
“Once the regulatory cooperation framework has been established, we will resume the assessment of equivalence with the UK authorities,” he said. “But let me clarify two points: first, there can be no equivalence with a wide regulatory divergence. Secondly, we will grant equivalence only when it is in the interest of the EU, in the same way that the United Kingdom has made its own equivalence decisions in its own interest ”.
However, the possibility of a limited equivalence is echoed in comments made last month by Frenchman Clement Beaune, junior minister for EU affairs.
“There will probably be a partial equivalence, probably at the end of the semester,” Beaune said in a February interview, noting that it would be “revocable, provisional, unilateral by the EU.”
– With the assistance of Ian Wishart, Silla Brush and Aoife White