We are now more than a week into leaving EU regulations and rules far behind.
We haven’t really. Most of the rules we followed a fortnight ago have been incorporated into UK law, and there has not yet been a burning down of the equivalent chapters of the FCA handbook.
Passporting has ended, and the FCA are reminding firms that they need to deal with each individual local regulator to continue providing services to clients in EU countries. This does mean more work if the EU remains part of your business model.
Wholesale Securities Markets
Cross-border access for wholesale securities markets remain unclear, and the level to which this will be permitted to a great extend depends on whether there will be full equivalence determinations. If not, the potential for conflicting cross-border policies arising from each individual regulator may complicate client offerings.
Without clarity there is a risk of markets fragmentation, which will have a real financial impact as well as viability concerns for UK participants in specific markets.
As with many financial sectors, it is hoped that the EU will offer the further equivalence determinations, but there still remain concerns that these may be limited in scope.
Brexit Finance Negotiations
Unbelievably, whatever your view on Brexit, negotiations on a comprehensive agreement on financial services are only starting next week, after the end of the transition period.
Populist policies and showboating over industries that form a far smaller part of the British economy have dominated the press and the public space. It is estimated by EY that around a trillion pounds of assets have left the City since 2016, an amount that could have been reduced almost daily, had proper consideration been given to an early and sensible agreement.
With the EU still not granting regulatory equivalence, and the UK government unwilling to give up sovereignty in this area, we are still in for the long haul.
Even at this stage, the negotiations are aiming for a ‘Memorandum of Understanding’ and an aim to set up further EU-UK talks in March.
It looks like we are in this limbo for the foreseeable future.
As we go forward into 2021, we all know that there will be changes that affect how we continue to do business with the EU and EEA. The situation is not ideal at the moment and we must be open to change and the opportunities that affords.
Support and information of financial risk and regulation can always be received from your regular contact or by clicking on the link here.