The City of London’s access to the European Union after Brexit should not be politicised by the bloc, given that Britain will maintain high regulatory standards in future, the UK’s financial services minister said on Monday.
So far, Brussels has only granted time-limited market access, known as “equivalence”, for clearing derivatives and settlement of securities trades even though Britain is still applying EU rules in full.
Financial services are being handled separately from this week’s talks between Britain and the bloc on a free trade agreement, though a deal could make Brussels more amenable to greater financial market access for the UK.
The EU has said it wants details from Britain on how it would diverge from EU rules from January before granting financial market access for the UK after full Brexit on Dec. 31.
UK financial services minister John Glen said Britain often goes beyond the EU in applying new rules, meaning any divergence would not lower standards.
“Our reputation globally is based on the highest standards, and not a race to the bottom,” Glen told a House of Lords committee.
“We have always been clear that the politicisation of equivalence is in no one’s interest, we are talking about an industry that underpins so many other industries,” Glen added.
Without more access, EU investors will have to stop using platforms in London to trade derivatives and shares from January. The London Stock Exchange opened a Dutch hub on Monday to avoid being cut off from customers.
Glen said Britain wanted an “enduring dialogue” with the EU on financial services, whatever the outcome of the FTA talks, but that UK rules would become more tailored to Britain’s needs.
“We are not seeking to have continuity, but we are seeking to have appropriate flexibility and customisation,” Glen said.
Forecasts of huge financial job moves to the EU have not materialised, and there was “considerable resilience” in the City and a desire to stay in London, Glen said.