14 November 2018

Reuters: Draft Brexit deal ends Britain's easy access to EU financial markets

The agreement will be based on the EU’s existing system of financial market access known as equivalence - a watered-down relationship that officials in Brussels have said all along is the best arrangement that Britain can expect.

The EU grants equivalence to many countries and has so far not agreed to Britain’s demands for major concessions such as offering broader access and safeguards on withdrawing access, neither of which is mentioned in the draft deal.”It is appalling,” said Graham Bishop, a former banker and consultant who has advised EU institutions on financial services. The draft text “is particularly vague but emphasises the EU’s ability to take decisions in its own interests.... This is code for the UK being a pure rule taker.” [...]

Equivalence, however, covers a more limited range of business and excludes major activities such as commercial bank lending. Law firm Hogan Lovells has estimated that equivalence rules cover just a quarter of all EU cross-border financial services business.

Such an arrangement would give Britain a similar level of access to the EU as major U.S. and Japanese firms, while tying it to many EU finance rules for years to come. [...]

Under current equivalence rules, access is patchy and can be cut off by the EU within 30 days in some cases. Britain had called for a far longer notice period.

BREXIT AND THE CITY

The draft deal is likely to persuade banks, insurers and asset managers to stick with plans to move some activities to the EU to ensure they maintain access to the bloc’s markets. [...]

Full article on Reuters

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