Plans by Britain and the European Union to set up a new financial cooperation forum by the end of March have made progress, but this will not automatically lead to market access, senior officials said Tuesday.
Britain’s trade deal with the EU that came into effect when it left the single market on December 31 does not cover financial services, leaving the City of London largely adrift of its largest market of ‘export. Trading in euro-denominated stocks and swaps has already left London for the EU and New York.
A forum for the exchange of views between British and European financial regulators would help improve relations. A forum has already been set up for watchdogs in the European and American markets.
“We are exchanging texts and discussing this, and in due course we will come to a resolution,” John Glen, UK financial services minister, told an insurance conference on Tuesday.
Meanwhile, Mairead McGuinness, the EU’s financial services commissioner, said “informal commitments” on a memorandum of understanding on regulatory cooperation were underway.
“Once we agree on our working arrangements, we can turn our attention to resuming our unilateral equivalence assessments,” McGuinness said, during an online event at the European Parliament.
Glen said EU equivalency assessments will not be part of the MoU. “It is a process that we cannot control,” he said.
The EU can grant direct market access to foreign financial services companies if it considers that their internal market rules are equivalent or sufficiently aligned with the Union’s own regulations.
Julian Adams, director of public policy and regulation at insurer M&G, said Brexit offered Britain the opportunity to have insurance capital rules “tailored to their needs”.
“My priority would be to get it right, not to focus on equivalence per se, because I think if you don’t do that you are essentially being dictated by European policy setting the agenda”, Adams told the insurance conference. .
The EU has only granted two temporary equivalency decisions for trade clearing and settlement for Britain.
“We consider our interests and will only take equivalency decisions that are in the interest of the EU. There can be no equivalence and great divergence, ”McGuinness said.
(Reporting by Huw Jones; editing by Jane Merriman and Richard Chang)
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