Photographer: Niklas Halle’n / AFP / Getty Images
Photographer: Niklas Halle’n / AFP / Getty Images
This week, the UK will start talks with the European Union on how regulators will cooperate in relation to financial services, as Brexit is over.
The financial services industry was largely left out of the trade deal that Prime Minister Boris Johnson reached with the bloc just before Christmas, but the two sides agreed to hire a memorandum of understanding on regulatory cooperation in the March.
“We want to preserve financial stability, market integrity and investor and consumer protection,” Johnson spokesman Jamie Davies told reporters Tuesday. “We pushed for a broader agreement on financial services as part of the negotiations, and Treasury will continue that work with the commission starting this week.”
How is equivalence the key to post-Brexit banking: QuickTake
The end of Brexit transition agreements last month threatens the city of London’s dominant position in financial services, which accounts for approximately 7% of UK economic output. Chancellor of the Exchequer Rishi Sunak and Treasury Secretary John Glen will take part in the talks, the government said.
The MOU intends to establish the framework for regulatory cooperation to allow for “bilateral exchanges of views and analysis related to regulatory initiatives and other issues of interest,” according to a joint statement in December.
It also seeks to establish a process for establishing the adoption, suspension, and withdrawal of decisions called “equivalences”. This process, separate from the MOU talks, implies that both parties accept that its rules are as strict as the others, allowing banks and other financial companies to do business smoothly across borders.
Equivalence resolutions
The UK is looking for these equivalence judgments unilaterally issued a set of its own decisions last year to allow EU financial institutions to continue operating in Britain.
A global agreement would help preserve London as the center of EU funding, but this may not be the bloc’s priority. It has long wanted to have more financial infrastructure to serve the economies of the EU and the euro area based in member countries.
Block officials from 27 countries stressed on Monday that the EU will not rush to assess the UK’s plans to regulate its financial sector and stressed that granting market access remains a unilateral decision that is not in place. negotiation.
Read more at From the EU posture
The EU granted two major equivalence decisions in the UK in 2020, but with 28 areas still open, it is unclear how much investment banking business can remain in Britain.
The first days of Brexit have already exposed the bet, with London it lost 6.3 billion euros in day-to-day operations at EU headquarters on 4 January, the first working day after the transition period.
– With the assistance of Silla Brush, Alexander Weber and Harry Wilson
(Updates with details on equivalence talks everywhere.)