The UK Government yesterday released its long awaited whitepaper on Brexit, "The future relationship between the United Kingdom and the European Union."
Whilst 100 pages long, the paper provided a fairly high-level direction as to the UK’s proposal for exiting the EU in relation to financial services.
Some key highlights include:
- Recognition that the UK can no longer operate under the EU’s "passporting" regime. This therefore means firms which have been applying a "wait and see" approach will need to quickly reconsider their approach to the provision of financial services in the EU post-Brexit.
- Recognition that whilst the EU currently does have an equivalence regime, this regime is not sufficient to deal with a third country whose financial markets are as deeply connected with the EU as the UK.
- A proposal for an expanded equivalence framework to reflect this interconnectedness. This would include more structure relating to the application of the principle of equivalence, including a more transparent assessment methodology, a structured withdrawal process and a long-term stabilisation plan in accordance with WTO principles.
- Highlighting the importance of the current state of regulatory dialogue and supervisory cooperation and high-level proposals as to how this may work in the future.
Whilst high-level, there is now a sense of direction of the UK’s proposals to the EU. The baton now passes to the EU to provide their reciprocal thoughts as to how a pragmatic relationship may be formed with the UK going forward that puts the needs of business and investors at the forefront.