City of London Faces Messy Future With the EU — Reuters
- Britain’s future access to European Union financial markets is looking increasingly patchy, as Brussels tries to limit the activities which can be carried out from London, prompting more business and jobs to cross the channel.
- While London is expected to remain Europe’s biggest financial centre with trillion-dollar foreign exchange trading and derivatives clearing staying put for now, recent moves by the EU to limit other trading activities to within the bloc have dashed the finance industry’s hopes of a wider agreement.
- Central to the argument is whether Brussels deems UK financial rules “equivalent” or aligned with the EU’s. Britain says this should be straightforward given both sides have the same rules at the outset.
- But last month Brussels said it wouldn’t allow banks in London to offer wholesale investment services to EU investors, piling pressure on the City to shift more activity to continental hubs.
- ING and BNP Paribas have since announced they will move more trading jobs out of London.
- Around 330 financial firms had already relocated some business from Britain to the EU, affecting 5,000 staff by October last year, ahead of a short COVID-19 induced pause, said think tank New Financial.
- The Bank of England weighed in on Thursday, warning Brussels’ move risked disruption to cross-border banking and derivatives trading come January, even if equivalence in other areas was agreed.
- Another big unknown is whether EU investors can continue trading EU listed shares on platforms run by Cboe, Turquoise and Aquis in London, rather than on a platform inside the bloc.
- All three have opened EU hubs as insurance, with final decisions on equivalence not expected until a wider free trade agreement that includes fisheries and other sensitive sectors is hammered out, something that is likely to drag on until at least October.