OAlthough the UK financial industry is threatened with losing full market access to the European Union, UK central bank governor Andrew Bailey is adopting a more confident tone. It is better to forego full access to the EU market after Brexit than to be degraded to the “rule taker”, said Bailey in a hearing in the House of Commons. The EU’s demand that the London regulation have to adapt to it is “problematic”. The free trade agreement between the EU and Great Britain negotiated shortly before the end of the year only covers trade in goods, not services. An agreement will be fought for financial services until spring.
Brussels can grant market access if it declares the British regulation for up to 40 individual fields to be “equivalent”, i.e. equivalent to EU rules. In the City of London, however, there have long been voices complaining of overregulation from Brussels. Bailey warned the price could be “too high”. “I strongly recommend that we don’t become a rule taker. If the price for this is then non-equivalence, then I fear it will come that way. ”A provisional agreement should be in place by March.
Since January 1st, trading in shares denominated in euros on the LSE London Stock Exchange has not been possible for the time being because the EU has not declared the London regulations to be “equivalent”. This means that large stocks of the German, French, Italian or Spanish stock indices can no longer be sold and bought directly on the Thames. The LSE is losing a daily turnover of 6 billion pounds. That is more than the daily turnover with UK stocks.
Retail has shifted to Frankfurt, Paris and Amsterdam, data from Refinitiv show. Before Brexit, up to a third of euro equity trading was at times via London. In terms of jobs, however, this does not mean any major changes so far, say experts. The London banks now need a customer manager in the EU, but the product dealers are mostly still on the Thames. It is estimated that between 5500 and 7000 jobs have been moved from London to EU financial centers so far.