Banks push Britain and EU to sort out financial market access
Britain and the European Union must make progress on post-Brexit financial market access as the coronavirus pandemic will make it even harder to cope with potential disruptions if no deal is reached, a banking lobby group said today.
Continued uncertainty over the pair’s future relationship combined with the economic downturn caused by Covid-19 could “aggravate existing risks” once the transition period ends and “significantly increase disruption to clients and markets”, the Association for Financial Markets in Europe (AFME) said.
Britain left the EU in January but has full access to the bloc under a transition period that runs until the end of December. The UK will automatically leave the single market and customs union if no deal is reached by then.
Future direct EU access will depend on whether Brussels deems UK regulation to be equivalent to standards in the bloc. Although it is far more limited than current access, without equivalence EU investors would not be able to use financial services in London.
London and Brussels last week blamed each other last week for missing a 30 June deadline for assessments on financial market access from January, with EU chief negotiator Michel Barnier telling financial firms to get ready for big changes next year.
“We will only grant equivalences in those areas where it is clearly in the interest of the EU, of our financial stability, our investors and our consumers,” Barnier said.
“Covid-19 has the potential to disrupt Brexit planning including impacting client readiness, as well as potentially affecting the ability of firms to relocate staff to other jurisdictions,” AFME said in a statement.
The lobby group called for a formal framework for UK and EU regulators to iron out differences that could jeopardise market access after the transition period ends.
“This is particularly important in the context of the fast-evolving legislative agenda in the EU and the UK with a number of significant financial services files being proposed, due to be implemented, or under review in the second half of this year and the first half of 2021,” AFME said.
The group added that the issue of whether EU investors could continue to use London’s clearing houses needed to be addressed by September to avoid customers having to move derivatives positions elsewhere.
Two-way access in stock and derivatives trading was also needed to avoid disruption, AFME said.