LONDON (Reuters) - Britain’s top markets regulator, backed by the United States, urged the European Union to soften its stance and grant broad access to UK banks after Brexit to avoid hitting investors and harming markets.
Britain and the EU are negotiating the outline of future trading terms and Brussels has said the best option for banks, insurers and asset managers is probably the bloc’s current system of market access known as equivalence.
Under this, the EU alone decides if a foreign country’s rules are close enough to its own to grant access.
“It would be a mistake to move away from open financial markets as they are needed to support trade in goods and services,” Andrew Bailey, chief executive of the Financial Conduct Authority, told a Eurofi conference in Vienna.
Britain has said equivalence does not cover all activities and lacks certainty, leaving the country facing patchy access to its biggest export market for financial services in future.
The EU’s financial services chief Valdis Dombrovskis told the same event that Europe must be and will be the champion of an open and integrated international system, based on multilateralism.
“This is true whether you look at the global trading system, or at financial regulation and equivalence,” Dombrovskis said.
Earlier this week, Christopher Giancarlo, chairman of the U.S. Commodity Futures Trading Commission, urged his counterparts in the EU and elsewhere to defer to each other’s rules when based on international standards.
He criticised EU plans to supervise U.S. and other foreign clearing houses on their home turf under revised equivalence rules.
Bailey said he strongly welcomed Giancarlo’s calls and urged the EU to back Britain’s proposal for a much broader form of equivalence, given that both sides will have identical rules when Britain leaves the bloc next March.
“And we should now work together to put in place the arrangements to achieve this in practise,” Bailey said.
Giancarlo told the Vienna conference it was time for the EU to expand the use of equivalence in a way that avoids “rule-by-rule exactitude”.
“Thus, EU can provide necessary legal and regulatory certainty to third country firms, and the EU should rely as much as possible on third country regulators and supervisors,” Giancarlo said.
Reporting by Huw Jones; Editing by Elaine Hardcastle