15 September 2016

Financial Times: US finance groups call for Brexit ‘transition period’

The biggest trade groups for the US finance industry have urged Treasury secretary Jack Lew to lobby for a post-Brexit “transition period” so members can adjust to the fallout, warning that if the process was not managed well it posed “significant risk to the financial markets and global economy”.

The call comes in a joint letter from heads of the American Bankers Association, theSecurities Industry and Financial Markets Association, the Financial Services Roundtable and the Financial Services Forum — big lobbying bodies for the US finance industry.

“Brexit will have a major global impact,” the letter noted. “To be sure, this is a matter between the people and governments of the UK and the EU. Because of the size and importance of the UK and EU markets, our member firms are monitoring events closely. Indeed, they have substantial investments in the UK and EU and rely upon the single passport to service customers and clients across the EU.”

Over 40 per cent of US exports of financial services to Europe go via the UK. Most major US financial institutions have a significant presence in the City of London, using it as their main European headquarters thanks to EU “passports” that allow them to operate freely elsewhere in the continent.

But the UK’s vote to leave the EU has worried the American financial industry about the future of their European operations, with many braced for years of negotiations. The letter to Mr Lew underscores the extent of those worries.

“It is critical that such a process is transparent, provding ample transitional relief for financial firms to adjust to the new regime, whatever that may be.”

Kenneth Bentsen, the head of Sifma, told a conference on Brexit in New York on Thursday.

The lobbying groups argued that US officials have a “legitimate stake in how the process is managed and the outcome to which it leads.” They asked Mr Lew to encourage his European counterparts to agree on some sort of transitional period for the finance industry to “navigate and adapt to any institutional or legal changes underpinning inter-EU/UK trade and investment relationships”.

“Such an arrangement should be flexible to allow it to be extended, if necessary, to avoid market disruption and financial stability risks,” the letter added. [...]

Full article on Financial Times (subscription required)

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