Amidst the UK’s process to gain regulatory equivalence and market access with the EU post-Brexit, Britain may be jeopardizing vital opportunities with the US and other regions who require the UK to maintain flexibility with international partners.
Following key discussions during the EU Financial Affairs committee at the House of Lords last week on March 4th, it became apparent that securing a deal with Brussels under an equivalence regime for financial services between the UK and EU may hinder Britain’s ability to gain deals with other jurisdictions such as the US.
At this time, it is difficult to tell whether the UK will converge or diverge from the EU’s regulation after Brexit. The FCA has stated that they are committed to preserving financial stability, move towards the direction of the “most equivalent framework to the EU”.
Other important matters to consider are how UK clearing houses will be treated post-Brexit if they do not align to EU equivalence. An appropriate equivalence regime is therefore vital for the UK in order to prevent friction for market access. For now, it appears that the UK will maintain equivalence with EU and global regulatory regimes in order to retain their market access. Once the Brexit transition ends on January 1st 2021, the UK will know where it stands.
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