(Adds more details from speech)
By Huw Jones
LONDON, March 23 The European Union's system for
granting market access to banks from outside the bloc will not
work for a financial centre as big as Britain's, a top European
regulator said on Thursday.
Gerard Rameix, chairman of France's AMF markets watchdog,
said the "equivalence" regime - whereby Brussels grants market
access to firms from non-EU countries governed by similar rules
- must be adapted specifically for Britain, which is set to
leave the European Union.
The bloc must have the right "tools" to protect investors
and manage risks to financial stability that come from outside,
"The UK will become a very particular third country on its
departure from the EU, considering the importance and size of
its financial markets, its location and its historical
relationship with EU member states," Rameix told a Chatham House
conference in London.
"The application of such a regime to the UK would therefore
His comments triggered alarm among some asset management
industry officials at the conference, worried that the EU would
be putting up barriers to trade by introducing different levels
of access for non-EU firms.
Rameix said the equivalence regime "must be carefully
This would require a more granular assessment of equivalence
compared with the current system based on outcomes, he said.
British-based banks, clearing houses and insurers are
looking for ways to access clients inside the EU once Britain
leaves, when it is expected that unfettered access to EU
financial services markets will end.
The equivalence regime was initially seen as one route after
Brexit, but banks say it's too politicised and subject to change
and instead some will move staff from London to subsidiaries on
Rameix said the bloc must also be able to supervise the
clearing of euro-denominated transactions. Such clearing is
currently based largely in London at operators like LCH.
Euro zone policymakers say clearing houses that handle such
trades could need large injections of the single currency from
the European Central Bank, if they get into trouble.
"Access to central bank liquidity is an issue that will have
to be addressed," Rameix said.
"The clearing of such instruments, which plays a systemic
role ... should come under the supervision of EU regulators to
allow them to address risks in this field."
Nevertheless, how financial markets will look after Brexit
remains unknown, with much depending on whether regulation in
Britain diverges from Europe after Brexit, he said.
Rameix said it was "in our common interest to maintain
constructive relations", but the bloc cannot allow itself to be
damaged by Britain's political choice to leave.
But the EU and Britain's Financial Conduct Authority must
continue to "preserve the same levels of data flows" as now to
ensure proper surveillance of cross-border markets.
"There is not a shadow of doubt that the City of London will
remain a key player in financial services," Rameix said.
(Reporting by Huw Jones; Editing by Alexander Smith, Greg