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16 September 2019

Financial Times: FCA chief calls on EU to soften stance on markets in event of no-deal Brexit

The head of the UK markets regulator has called on Brussels to offer more equivalence permits to smooth potential disruption to markets if the UK leaves the EU without a deal next month.

[...]The UK is disputing an EU rule that demands some 6,200 stocks that EU-registered investors would have to trade on European exchanges if the UK were to leave the single market without a deal. The ruling has irritated UK regulators and EU fund managers, and they have urged European authorities to further revise their plans by recognising the UK as having “equivalent” standards.

“We need to find a way through this together that does not create barriers and distortions on either side. We stand ready to enter into dialogue with our European counterparts before we finalise our approach,” he said.

While the FCA had the power to delay the implementation of some rules for share trading markets “we cannot fully mitigate the damage done,” he said. Mr Bailey also said there would soon be a need to renew the EU’s permit that will let EU investors and banks access UK clearing houses in a no-deal Brexit. The EU’s temporary permit will expire at the end of March. London is the main global centre for trading and clearing of derivatives like swaps and futures.

“This process will need to begin by the end of the year and would impose significant costs on EU firms as well as potentially straining market capacity,” he said. “Ultimately, the best solution is for the EU to grant permanent recognition to UK clearing houses.” [...]

Full article on Financial Times (subscription required)

FCA's Bailey speech: Preparing for Brexit in financial services: the state of play

© Financial Times

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