On March 20, the UK government published its response (Response) to the House of Lords EU Sub-Committee on Financial Affairs report on Brexit and financial services (Report).
In the Report, which was published in December 2016, the Committee set out recommendations for the government relating to financial services, covering issues such as transitional arrangements and market access.
In the Response, the government considers each of the Committee’s recommendations in turn, repeating information provided in the February 2017 white paper on Brexit (further information on the white paper can be found in the Corporate & Financial Weekly Digest edition of February 3, 2017). In particular, the government states that it intends to pursue the “freest possible market access” within the UK’s future relationship with the European Union and to agree a phased process of implementation with the aim of avoiding a “disruptive cliff-edge” when the United Kingdom leaves the European Union.
The government confirms that HM Treasury will lead on the negotiations relating to financial services, including ongoing business as usual negotiations, while the Department for Exiting the European Union has responsibility for overseeing negotiations to leave the EU and establishing the future relationship. The Response also suggests that it is unclear whether, post-Brexit, the European Central Bank would be permitted under single market rules to require euro-denominated instruments to be cleared inside the Eurozone.