UK-EU regulatory dialogue key to post-Brexit financial trade: banking official

This post was originally published on this site

By Huw Jones

LONDON (Reuters) – Intense dialogue between British and European Union financial regulators must start now or London risks being cut off from the bloc after Brexit, a top banking lobbyist said on Wednesday.

Banks, insurers and asset managers in Britain currently have unfettered access to customers across the EU but this will end after Britain leaves the bloc.

Future EU access for UK financial firms will almost certainly be based on “equivalence”, whereby Brussels deems that a foreign firm’s home rules are aligned enough with those in the bloc to protect financial stability and customers.

Simon Lewis, who stands down as chief executive of the Association for Financial Markets in Europe (AFME) this month after a nine-year stint, said that for equivalence work, good regulatory links were needed.

“You need to have structures in place like the EU-U.S. dialogue, and they probably need to go beyond that,” he said.

“They need to get on with that. That work hasn’t started. The sooner we can have that discussion about how equivalence is going to work and be adapted, the better.”

EU and UK markets watchdogs are, however, at loggerheads over whether swathes of trading in euro-denominated shares can continue in London if there is a no-deal Brexit.

There is also tension over how much EU regulators should be allowed to regulate UK clearing houses with EU customers.

Close regulatory dialogue would help clear up “misunderstandings” and avoid equivalence decisions “going the wrong way”, Lewis said.

While few jobs or activities have moved so far from London to new EU hubs, it was “early days”.

“Banks are looking at how they can minimize the cost of moves by where possible local hires or deferring decisions,” he said.

Much could hinge on what asset managers in London do, with many having opened hubs in Dublin and Luxembourg.

“If over time the asset managers physically move from London, then that will make quite a difference.

“It’s a golden rule of any business that you should be close to your customers. That again is not entirely clear how that is going to play out,” Lewis said.

Banks also need to rebuild public trust shattered by taxpayer bailouts during the financial crisis a decade ago.

“The industry has been seen to have overlobbied on certain issues and there was a degree of distrust about that,” Lewis said.

“There was a feeling that the industry was taking it for granted that its voice would always be heard. The rebuilding of trust in the industry will take quite a long time.”

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.