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10 March 2020

Financial Times: Brussels warns no quick decision on City market access

The EU is preparing to rebuff UK pressure for a quick decision on market access rights for the City of London, in a setback to Boris Johnson’s plans to cushion the effects of Brexit on the country’s powerful financial services sector.

Rishi Sunak, the chancellor, used a letter to the EU last month to urge rapid progress, saying he could “see no reason” why both sides could not complete the necessary approvals in time for a June deadline. But EU officials said the process will drag on at least until later this year. 

Valdis Dombrovskis, the EU’s financial regulation chief, said: “We should start assessing equivalence as soon as possible with a view to concluding these assessments by the end of June. But we will take the actual decisions later, taking into account overall developments, including any divergences from EU rules.” [...]

“The EU will not make the integrity of its financial system dependent on a non-EU regulator,” said one EU diplomat. “Without assurances on alignment we risk London turning into an offshore centre with keys to the EU’s financial system. It is prudent to start from a well-defined position and not rush matters.”

Europe’s financial regulations incorporate around 40 different equivalence provisions, including the ability of EU companies to use clearing houses and stock exchanges located outside the bloc. They can also be used to provide market access rights to non-EU brokerages to offer trading services throughout the union. 

As part of Britain’s Brexit deal, signed last October, the EU and UK agreed that each side should start assessing the other “as soon as possible after the United Kingdom's withdrawal from the Union, endeavouring to conclude these assessments before the end of June 2020”.

  EU officials, however, do not interpret the wording in the agreement as a requirement to take a decision by June: they argue that the two sides should merely endeavour to complete assessments of each sides’ systems by that time. [...]

Full article on Financial Times (subscription required)

© Financial Times

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