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In a working paper, French diplomats in Brussels renewed a proposal that non-EU firms be forced to set up a branch in the bloc overseen by EU regulators, saying that the current so-called equivalence rules have “significant shortcomings.” As it stands, MiFID II allows foreign companies to do business in the single market when the EU deems regulation in their home countries to be as tough as that inside the bloc.
The flaws identified by France could “threaten the integrity of EU markets” and harm the competitiveness of EU firms, according to the Sept. 18 paper seen by Bloomberg.
France’s attempt to toughen the MiFID II equivalence rules comes as U.K. financial firms are bracing for life after Brexit, when they’ll lose the so-called single-market passport that allows them to sell services from London in any EU country.
Some EU countries are hesitant to join with France, in part because there’s little time for lawmakers to work on the legislation before the scheduled Brexit date in March followed by elections to the European Parliament, according to officials involved in the talks. [...]