the UK still doesn't have its financial passport for Europe

View of the City district in London on March 9.

Nothing is easy between London and Brussels. As the UK’s actual exit date from the European Union (December 31) approaches, negotiations between the two ex-partners are slipping. Much has been said lately about their difficulty in finding common ground on the nature of their future business relationship, their judicial and police cooperation, and even on fishing. But things do not seem much more advanced on the financial services front, on which the two parties had however planned, in 2019, to agree before June 30, 2020 …

As a reminder, after Brexit, the banks and other establishments of the City will lose the "passport" which allows them today to operate freely on the continent. From 1er January 2021, to have access to European financial markets and deal with euro securities, they will have to take advantage of"Equivalences" that the European Commission will have allocated to the United Kingdom. Clearly, Brussels must decide to allow (or not) insurers, bankers and other pension funds established across the Channel to operate in the EU. And for a period which can be more or less long …

A "tailor-made" approach

"We have no illusions: the United Kingdom is going to deviate from our regulatory framework, this is even one of the reasons for Brexit"said European chief negotiator Michel Barnier on June 30 at the general assembly of the think tank Eurofi. Financial equivalents therefore aim to protect Europe as far as possible from any external element of financial instability. "We will only give equivalences when it is in the interest of the Union, our financial stability, our investors and our consumers", insisted the Frenchman.

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In this context, the Commission needs to know how the United Kingdom intends to develop its financial regulations, which are now aligned with Community standards. The services of Valdis Dombrovskis, the commissioner responsible for the subject, sent twenty-eight questionnaires to the British administration, relating to financial reporting, auditing, rating agencies, insurers, banks … At this stage, they only received responses for four of them.

The week of June 22, the British Treasury gave initial information on how London wanted to see changes to its financial regulations. "It's a first step", we judge in Brussels. While stating that the United Kingdom essentially wants to remain aligned with European and international standards (Basel rules, bank capitalization, etc.), City Minister John Glen nevertheless assured that he "There will be changes" and hinted that the country would not refrain in the future from an approach " tailored " concerning, in particular, the regulation of investment companies. "We are analyzing these documents and awaiting answers to our questionnaires", we answer today to the Commission.

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