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That means the EU will only let U.K. banks access its market for as long as it considers British rules to be equivalent to the bloc’s.
It’s an unstable arrangement as the EU can withdraw the approval at short notice, and Chancellor of the Exchequer Philip Hammond speaks for banks when he says such a setup would be "wholly inadequate."
The use of the word "improved" in the draft is intentionally vague, according to an EU official who declined to be named. The EU is already working to tighten up its equivalence regime -- which is used now by U.S. banks -- and is doing so with Brexit in mind. Some EU members are keener than others on giving the U.K. a good deal on finance, and the wording of the draft text reflects that tension. [...]
The new wording is in an annex to the draft guidelines and will be discussed by EU ministers meeting on Tuesday. Earlier drafts didn’t mention financial services explicitly although they made clear that the trade agreement the EU intends to strike with the U.K. wouldn’t make special provisions for services.
“Regarding financial services, the aim should be reviewed and improved equivalence mechanisms, allowing appropriate access to financial services markets, while preserving financial stability, the integrity of the single market and the autonomy of decision making in the European Union,” the draft reads. “Equivalence mechanisms and decisions remain defined and implemented on a unilateral basis by the European Union.”
The commission has already started to review financial services legislation, to ensure that equivalence rules are appropriate for the situation after the withdrawal of the U.K., according to the document. [...]