LONDON (CU)_Britain’s upper house of parliament said on Wednesday that access to the European Union’s financial market may not be worth it, as it would require London to sacrifice autonomy over setting rules in order to gain full access.
Following the expiration of the Brexit transition period on 31 December, large amounts of trading in stocks and derivatives denominated in euros have shifted from London to Amsterdam, and Brussels is yet to grant Britain direct access to the bloc’s financial market.
The EU will consider whether to grant full access once a memorandum of understanding is agreed between London and Brussels on a new forum for cooperating on financial rules.
“We agree that broad positive equivalence determinations would best meet the needs of practitioners in both the UK and the EU, but recognise that in many areas the EU is unlikely to grant these without the UK sacrificing more decision-making autonomy than equivalence is worth,” the lawmakers said in the report.
They added that this dialogue would not be worthwhile if it is not based on trust and transparency and therefore urged the government and regulators to develop a deep level of cooperation, predictability and information sharing.
“The government should consult regularly to ensure it is representing the UK financial services sector’s interests and priorities in the dialogue,” the report read.
“Changes should be transparent and designed to enhance the attractiveness and competitiveness of the UK’s financial services sector.”
London has already issued proposed reforms to regulations covering financial technology firms and company flotations, while the government is also expected to amend solvency rules for insurers.
Nevertheless, the Bank of England has already warned that the country’s financial services industry should not be forced to accept rules set out by Brussels, an approach welcomed by the lawmakers in their report.
