[1/2] Mairead McGuinness, Commissioner for Financial Stability, Financial Services and the Capital Markets Union, speaks during a joint press conference with the US Deputy Treasury Secretary…
LONDON, May 17 (Reuters) – The executive body of the European Union said on Wednesday it had formally adopted a draft memorandum of understanding (MoU) to allow UK and Union financial regulators to work more closely together, albeit without market access.
The UK’s exit from the EU largely disrupted the financial sector’s previously unrestricted access to the EU, raising concerns about London’s role as a global financial hub.
As part of Brexit terms, the EU agreed to formalize cooperation between financial regulators. However, this was put on hold in Brussels following disagreements between the bloc and Britain over Northern Ireland, which have now been resolved by the Windsor Framework.
The European Commission announced on Wednesday that it has accepted the draft of the MoU, but still needs the final political approval of the EU states.
“I am confident that our relationship and future engagement in financial services will be based on a shared commitment to safeguarding financial stability, market integrity and consumer and investor protection,” said Mairead McGuinness, EU Commissioner for Financial Services, in a statement .
The MoU will create a joint financial regulatory forum between the EU and the UK, similar to what the EU already has with the US.
“The MoU does not address UK-based companies’ access to the Single Market – or EU companies’ access to the UK market – nor prejudge the adoption of equivalence decisions,” the Commission said.
Joanna Penn, Finance Secretary in the UK House of Lords, welcomed the “positive step” given the close interdependence of the EU and UK financial markets.
“The Treasury is ready to sign the MoU and we look forward to getting the forum up and running as soon as possible this year,” Penn said at an EU-UK financial services debate.
Finance ministers will meet with McGuinness next week, Penn added.
The EU has granted derivatives clearing houses in London “equivalence” or EU market access until the end of June 2025.
Meanwhile, the Union has tabled a bill that would force EU banks and asset managers to move a yet-to-be-decided part of their clearing home out of London, although industry officials expect equivalence to be extended in some form later in June 2025
Reporting by Huw Jones; Edited by Paul Simao
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