Brussels says it won't be rushed on City of London access to EU

© Reuters.

By Huw Jones

LONDON (Reuters) – EU Financial Services Commissioner Mairead McGuinness said on Tuesday that Brussels would not grant Britain’s financiers access to the bloc before assessing the risks to financial stability – and that to do otherwise would be an “experiment”.

Britain left the EU almost a year ago, and a post-transition trade deal that kicked in on Jan. 1 does not cover financial services, cutting the City of London off from its most important customer.

Talks have begun on a memorandum intended to cover cooperation in financial regulation by the end of March, but Brussels will not consider actual market access until later.

McGuinness said the effect on financial stability would be considered, along with Britain’s intentions about diverging from rules inherited from the bloc.

Britain has said it wants to amend some rules, though not weaken standards. Brussels must decide if UK rules are ‘equivalent’ or aligned enough with the bloc.

“We do not like ‘light-touch’, and deregulation is not on our agenda,” McGuinness told reporters.

“The idea of just granting equivalence to everything and then see what happens is not strategic, in my view. I would regard that as a bit of an experiment that I am not prepared to go along with.”

Some 6.5 billion euros in daily euro share trading left London for the EU on Jan. 4. Bankers say the costs of switching back mean that this business is unlikely to return, even if Britain is eventually granted ‘equivalence’ in share trading.

Bankers say some trading in derivatives has also moved from London to the EU and the United States.

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The European Commission, the EU executive, published a strategy paper on Tuesday outlining how it aims to bolster the role of the euro in a global financial system dominated by the dollar.

Moving other activities such as much of euro derivatives clearing from London to the bloc dovetails with that objective.

McGuinness said it was likely that more financial jobs would leave London for the EU, and that assessing UK access would be a “big body of work” through 2021 and beyond.

“It’s not a question of Europe trying to bring everything back home, not at all. It is a question of Europe ensuring that at home Europe is strong, and can be strong globally,” she said.

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