22 August 2018

Financial Times: EU vows to get tough on UK’s market access after Brexit

Valdis Dombrovskis said he welcomed UK proposals to build market access for the City of London around EU rules, known as “equivalence”. But he said market access could never be taken for granted, with Brussels determined to toughen its assessments of whether countries meet the conditions.

The equivalence rules make it easier for non-EU financial institutions to operate in the single market if the European Commission decides that their home country’s financial regulations are as tough as the EU’s own.

Mr Dombrovskis said Brussels was not offering any kind of “super equivalence” to the UK, and that assessments of whether Britain qualified would require individual assessments “sector by sector and legislation by legislation”.

He also said Brussels was pressing ahead with measures to reinforce oversight of equivalence access, with stronger requirements for countries’ financial supervisors to share information with the EU and more monitoring of whether jurisdictions continued to meet the criteria.

“We see that there is a need to strengthen systemic monitoring of continued compliance,” said Mr Dombrovskis. “So this is one area where we will come with a more systematic approach.” [...]

Valdis Dombrovskis said Brussels was open to discussion of adding more equivalence possibilities into EU law The British government, in a white paper on Brexit published in July, said it should benefit from a full set of equivalence rights after the end of its post-Brexit transition period in 2020. Britain also called for equivalence to be expanded to “encompass a broader range of cross-border activities”.

Mr Dombrovskis said Brussels was open to discussion of adding more equivalence possibilities into EU law, noting that national governments were negotiating draft legislation that would clarify access rights for non-EU brokerages and other investment firms.

“We are, if you want, at a relatively early stage, because the UK white paper is actually the first time the UK clearly acknowledges that it is willing to build on this system of enhanced equivalence,” he said.

“We can now get into more detail and discuss what exactly that means, what areas are covered, are there some important areas missing and so on.” [...]

Mr Dombrovskis said it was positive that Britain had embraced a “more realistic way forward” compared with earlier plans to bypass equivalence by securing broader, permanent access rights — an idea Brussels has comprehensively rejected.

He also said that while equivalence was in the EU’s gift, Britain should not underestimate its stability. The EU has never reversed an access decision.

“Something major needs to happen for that to happen”, he said. “And so far there has not been any single precedent for that.” [...]

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