Brussels will sign an agreement with Britain to boost cooperation on financial services regulation, in yet another sign of better relations following this year’s resolution of the long-running dispute over Northern Ireland’s trade deals.
The European Commission saying on Wednesday it had adopted a draft memorandum of understanding that would create the framework for voluntary regulatory cooperation, including the establishment of a joint EU-UK Financial Regulation Forum. This will improve coordination between the two parties and replicate agreements the EU already has with other major jurisdictions, including the US.
The MOU, which will now have to go to EU member states for approval, was stalled for two years due to the contentious relationship between London and Brussels following the signing of the Trade and Cooperation Agreement establishing post-Brexit trade relations. . .
It is the latest sign of a thaw between the two sides since they established the Windsor framework in February in a bid to improve trade between Britain and Northern Ireland.
“The Windsor framework allowed the EU and the UK to open a new chapter in our partnership based on a spirit of mutual trust and cooperation,” said Mairead McGuinness, Commissioner for Financial Services.
“I am confident that our future relationship and engagement in financial services will be based on a shared commitment to preserve financial stability, market integrity, and consumer and investor protection.”
The draft MOU aims to encourage the exchange of views and analysis on regulatory developments and markets, encourage dialogue when it comes to making equivalency decisions, and intensify cooperation in international regulatory bodies.
Nicola Watkinson, managing director, international, TheCityUK, a lobby group, said: “The MOU on financial services has been a long time coming and this progress is another positive step in building UK-EU relations.”
He added: “We hope it will have a mechanism to engage the industry in discussions related to regulatory cooperation and we look forward to further progress.”
But Brussels warned companies that the MOU itself would not improve cross-border access to financial markets.
“The MOU does not address the access of UK-based companies to the single market, or the access of EU companies to the UK market, nor does it prejudge equivalency decision-making,” a spokesperson for the MOU said. commission.
The commission has granted equivalence only to UK-based derivatives houses, which are allowed to continue euro-denominated trading until June 30, 2025, while the bloc develops its own capacity in the sector. .
Finance chiefs are pressing the commission to consider a further extension of this deadline, but Brussels has indicated this would be a decision for after the summer 2024 European elections.
UK Prime Minister Rishi Sunak has sought to strengthen ties with Europe on a variety of issues, including the war in Ukraine and cooperation on migration, following years of tension under former Prime Minister Boris Johnson.
Andrew Griffith, Treasury Economic Secretary and City Minister, said: “We welcome the positive news that the EU Commission is proceeding with the adoption of the Memorandum of Understanding on Regulatory Cooperation in Financial Services. As we said before, the Treasury is ready to sign the MoU and we hope to establish the forum as soon as possible this year.
Additional reporting by Laura Noonan in London