Thursday 12 November 2020 3:55 pm

UK regulators prepared to intervene if Brexit disrupts markets, says FCA

British regulators are prepared to intervene if the UK’s full departure from the European Union on 31 December risks disrupting financial markets, an executive from the Financial Conduct Authority (FCA) said.

While Britain has already left the bloc, post-Brexit transition agreements gives banks and trading platforms full access to EU markets until the end of the year. 

With less than two months until the transition period ends, Brussels has so far allowed only limited cross-border trading in derivatives clearing and asset management beyond then. 

“We are doing our planning as I am sure firms are as well to ensure operationally that the end of transition is a smooth one,” said Nausicaa Delfas, the FCA’s head of international.

The watchdog will work closely with the Treasury and Bank of England on the issue, Delfas told Reuters. 

“With passporting ending… and there is a patchwork of solutions on the EU side, which means that we need to be vigilant to ensure we are prepared and able to address any issues arising over that period,” she said.

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Delfas also said the FCA needs to remain vigilant over the looming row on where UK and European banks will be able to trade derivatives, adding that if Brussels does not grant full two-way derivatives training the regulator will set its own rules in “due course”.

Negotiators from Britain and the EU are currently holding talks in a last-ditch attempt to reach a post-Brexit trade agreement, but the issue of market access for financial services is being dealt with separately.

City A.M. has reported that the EU is not planning to grant the UK regulatory equivalence, which would give the City access to the bloc’s markets, before the end of the transition period. 

If Brussels does not grant the UK equivalence – granted when Brussels deems a country to have similar financial services regulations to its own, British financial services firms face having to deal with individual European countries’ regulatory regimes separately.

Many banks, insurers and trading platforms based in London have opened offices in the EU to minimise cross-border disruption post-Brexit.

“We should not assume, even if a deal is agreed, that it will mitigate outstanding risks in financial services,” Delfas said.

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