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The Financial Conduct Authority, which opened in April, has broken publicly with the formal EU interpretation of two different rules in the past three months, in moves that City experts have linked to the government’s recent tougher stance on Europe. Lawyers described the shifts as significant milestones coming as the UK seeks to minimise the negative impact on the City of financial regulations.
In late May, the FCA formally rejected the direction on tough new short selling rules issued by the European Securities & Markets Authority. Then on August 15, the FCA announced it had also declined to follow a European Commission interpretation of the Alternative Investment Fund Managers' Directive. The EU said fund managers cannot offer both AIFMD services and brokerage services under the EU’s Markets in Financial Instruments Directive (MiDIS) on a cross-border basis, but the FCA disagreed.
The FCA and the Treasury each downplayed a possible split with Europe on financial regulation. They noted that the AIFMD and the short-selling regulation were unusually controversial when adopted and that the AIFMD was passed as a directive so the UK has more freedom to stray from the European Commission interpretation.
Several London bankers and investment managers linked the FCA’s changed attitude to the government’s tougher stance on Europe. Some in the City say they hope the UK will also reject other EU guidance, including the European Banking Authority’s tougher than expected rules on new EU bonus restrictions.
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