169th Brussels 4 Breakfast

20 January 2021

The Dec 24 Trade and Cooperation Agreement gave short shrift to services - and very short shrift to financial services. But both sides did commit to an MoU on regulatory cooperation by March 21. That doesn't mean agreement on 'equivalence', or anything like that.


Why you should watch:

But at least each side will have the other's telephone number. In the meantime, however, both the EU and UK are starting to diverge - and that can only accelerate as we seek a competitive edge (Sunak's 'Big Bang 2.0') and as the EU's never-ending regulatory review process takes in Mifid, Solvency 2 and other key legislation. Note also the new Commission paper on boosting the international role of the euro, the growing 'bad bank' problem in Europe, a major row brewing over data transfer to third countries and hints of a toughening of its position vis-a-vis the UK from ESMA.

 Moderator: Andrew Hilton (Director, CSFI) 

 Graham Bishop is an independent consultant on European political, financial, economic and budgetary integration. He is also, he says, a 'dedicated Europhile'. He has been a fixture in the City since 1972, beginning with Phillips & Drew and ending with Citi, where he was European bond analyst.

 Pablo Portugal is MD for Advocacy at the Association of Financial Markets in Europe (AFME), and a member of the Board of the European Capital Markets Institute. Born in Peru, with an MSc from LSE, he was previously the ICAEW's head of EU regulatory affairs in Brussels.

 Vicky Pryce is a Greek-British economist and author (of, inter alia, Greekonomics and Women vs. Capitalism). She was formerly a senior MD at FTI Consulting, the joint head of the UK's Economic Service, chief economic adviser at the DTI, and chief economist at KPMG. She also has an MSc from LSE, and is currently a Visiting Professor at Birmingham.

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My choice of the key topics for discussion (selected from www.grahambishop.com)

Brexit:     24  Dec Trade and Cooperation Agreement (TCA)

o   What does it say about financial services? Prudential carve-out, autonomy, MoU regulatory co-operation?

o   Equivalence: only one so far – CCPs; EU request on 28 areas, trust

o   EU major policy reviews/new policies: banking, securities, insurance, asset management, payments; green, digital. (more below) Why would EU talk about equivalence until it has finalised its own rule after reviews?

o   UK actions: Sunak advocating new rules, ”Big Bang 2.0”, FCA already consulting on changes to UK rules, Bailey says “wrong to be a rule-taker”

o   Conclusion: significant and growing divergence during 2021 so broad equivalence decisions unlikely

General

Commission statement on boosting international role of euro;  Progress on RRF – scale of European Commission issuance ahead; EDPB consultation – Schrems II

Banking

·        EBA report on capital , profits etc; Bad bank – EU or national?

Capital Markets Union

·        AIFMD review, MiFID, Solvency II,

ESG

·        €1 trn ESG ETFs; Financial reporting: growing support for IFRS role

Digital

·        Digital Markets Act; ECB’s consultation on digital euro – record/8000 replies


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