Thursday 22 April 2021 4:23 am

City needs EU equivalence deal to function properly, warns asset management chief

The UK government should step up efforts to secure an equivalence deal for financial services as such an agreement is “very important” for the Square Mile, the CEO of one of the world’s largest asset managers has said.

Hanneke Smits, who leads BNY Mellon Investment Managers, urged the government to reach an agreement with the EU as “it will be very important for the City to continue to provide services and function properly.”

“We really need to get the proposal on equivalence agreed. It needs strong focus on the part of the UK government. It’s taken quite some time,” Smits told Financial News.

The City lost its pre-Brexit access to EU markets on 1 January when the UK left the single market and customs union.

Brussels can grant direct market access for foreign financial services firms if it deems their home market rules are similar to the EU’s own standards, a designation known as equivalence.

Cooperation deal

Smits’ comments, who became CEO of St Paul’s-based BNY Mellon IM in October of last year, come about a month after the UK and EU agreed the terms for future cooperation on financial services between the two jurisdictions. 

The MoU creates a framework for voluntary regulatory cooperation in financial services between the UK and the EU, and will establish the Joint UK-EU Financial Regulatory Forum, which will serve as a platform to facilitate dialogue on financial services issues.” 

UK and European officials have been locked in discussions about the future of financial services since January. 

Brussels said an MoU will not automatically lead to market access for UK firms after the transition period ended at the end of last year. The agreement is similar to the existing deal between EU and the US and the bloc has declined to grant any long-term direct access to British firms.