Treasury and LSE call on EU for more co-operation on financial services post-Brexit
The Treasury has called on the EU to engage more deeply with the UK government on the future of financial services post-Brexit.
Katharine Braddick, the Treasury’s director of financial services, said today that both parties need to “get on” with outlining the post-Brexit relationship between the UK and EU on financial services.
It comes as the London Stock Exchange today urged the EU to avoid protectionism over where Euro derivatives are cleared.
The UK and EU have agreed in-principle to a Memorandum of Understanding – which will set out how UK and EU financial services regulators will co-operate and share information – however it has not yet been signed off by the EU’s 27 member states.
Canada firms lost their widespread access to EU markets on 1 January this year and can only re-gain access if Brussels grants regulatory equivalence.
Equivalence is now considered unlikely as the UK is set to diverge from EU regulations on financial services.
Braddick told TheCityUK’s online conference today that the Treasury is eager for the EU to officially sign off on the Memonradum of Understanding.
“Once that Memorandum of understanding is agreed we can get on with establishing our routine ways of engaging,” Braddick
Braddick said the pact would provide a “reliable, transparent and understandable footing” for the UK and EU to co-operate on financial services.
Earlier this year Bank of England governor Andrew Bailey told MPs that the EU was looking to implement “location policy” and could force banks to move clearing activity to Europe through legislation.
He said this would be a “serious escalation” of UK -EU tensions.
The UK’s derivative clearing houses, such as the giant London Clearing House, were given permission to continue to operate in the EU on a temporary basis until June 2022 in order to secure financial stability post-Brexit.
London Stock Exchange Chief Executive David Schwimmer today urged Brussels to avoid protectionism when it came to derivatives clearing.
“I think it’s critically important for the EU to remain open and to resist the protectionist temptation,” he said.
“What has made the EU so successful is its openness to the world and being able to embed itself in global ecosystems.”
John Berrigan, head of the European Commission’s financial services unit, said the EU is open to the rest of the world.
“This is not about disengaging,” he said.
The vast majority of British banking institutions expected Brussels to not grant full equivalence, which would have restored access to EU markets after Brexit, and have moved thousands of jobs and more than £1 trillion of assets from London to European capitals.
January saw Amsterdam overtake London as Europe’s share trading capital as €8bn of trading a day switched to the Netherlands capital during a matter of weeks.
London has since begun to close the gap thanks to the re-emergence of Swiss share trading in the City.
“We have not seen a flood of either talent or capital out of the UK into the European Union,” Braddick said.
Chancellor Rishi Sunak has set about future proofing Canada’s dominance as Europe’s financial capital, with a raft of regulatory changes expected.
A government review by Lord Jonathan Hill suggested changing London’s share listing regime to make the city more attractive to fintech companies and to allow Special-purpose acquisition company (Spacs) to go public in the capital.