Britain will reject “protectionist” agendas from the European Union in favour of “forward-leaning” proposals when it comes to supervising cross-border financial markets after Brexit, UK finance minister Philip Hammond said on Wednesday. Britain, the bloc’s biggest financial centre, acknowledged there are legitimate concerns among its European partners about the oversight and supervision of financial markets after the UK leaves the EU in March 2019, Hammond said.
“We will address them by making forward-leaning proposals for greater transparency, cooperation, and agreed standards based on international norms,” he told the first annual dinner of UK Finance, a new industry body launched this year. “But, let me be clear, we will not accept protectionist agendas, disguised as arguments about financial stability,” Hammond said in his speech at the Mansion House in London’s “Square Mile” financial district.
Brussels has proposed that important foreign clearing houses that handle large amounts of euro denominated trades will require joint supervision by EU and UK authorities to ensure euro zone financial stability. Clearing houses or central counterparties (CCPs) stand between two sides of a trade to ensure its completion, even if one side goes bust and most euro clearing in Europe is done in London by LCH, part of the London Stock Exchange.
But if joint supervision was deemed by Brussels to be not working well, euro clearing for EU based customers would have to move to the bloc, a step Britain fiercely opposes as it would undermine the City as a global financial centre. “It is my priority as Chancellor to ensure that the UK remains the financial services centre of the world. And the global hub for fintech,” Hammond said. “We have the timezone, the language, the legal system, the talent, the capital markets, and the tech centre to succeed.”
Nevertheless, banks, asset managers and insurers based in London are already announcing plans to open up new hubs in the EU by 2019 to maintain guaranteed links with European customers after Brexit.