The EU’s financial services chief has warned the UK that “there cannot be equivalence and wide divergence” in financial regulation as the battle over the City’s future relationship with the bloc heats up.
Mairead McGuinness also confirmed fears held by many in the City that the EU would demand to know the UK’s future regulatory plans as a prerequisite to any further agreement – a state of affairs Bank of England Governor Andrew Bailey has described as unacceptable.
Speaking this afternoon, McGuinness said equivalence decisions would only be made after the signing of a memorandum of understand between the two sides by the end of March.
And McGuinness said decisions would be on a “case by case” basis and that the EU would act purely “in our own interests.”
McGuinness said that the draft of the memorandum of understanding is “very similar to what (the EU) has with the United States,” further dampening any remaining hopes the UK could be granted blanket equivalence.
Agreement on an MOU will have to be reached, along with a bilateral regulatory forum, before any market access deals can be discussed, McGuinness hinted.
She was speaking at a conference organised by Finance for Ireland, hosted by the Financial Times.
The City of London lost its top spot for trading equities in January, with Amsterdam taking the lead. However, with such trades garnering extremely low margins, the financial hit to the capital is expected to be small.
Some believe the UK is better off without hard equivalence agreements, allowing the City to carve out a niche as a hub of global, as opposed to just European, finance.
Barclays boss Jes Staley said last week that “what London needs to be focused on is not Frankfurt nor Paris… (but) on New York and Singapore.”