Its very likely that the European Union will place Britain in the same category that it places the U.S. and Singapore: restricted market access to the Eurozone.
On Tuesday, John Glen, Britain’s Economic Secretary to the Treasury, stated, financial services will remain a “guiding light” for Britain’s economy after Brexit.
“My priority is to ensure that financial services remain a national priority in robust health,” said Glen at an annual conference of FIA IDX.
With Britain set to leave the safe harbors of the European Union in March 2019, questions are being raised as to how the country’s banks, insurers and asset managers will continue to serve their existing customers in the EU.
Pro-Brexit lawmakers have said, Britain should ease banking regulations to allow sufficient leeway for the City of London financial district to keep ahead of the pack.
“We do not intend to rip up the rulebook after Brexit,” said Glen, who is responsible for the financial services industry as a junior minister at the Treasury.
During the 2007-2009 financial crisis, Britain had to bail out its banks. Since then tougher norms have been introduced which have attracted international plaudits.
Britain sold off a chunk of its shares in Royal Bank of Scotland on Tuesday.
“We are witnessing the triumphant return of a degree of discipline and robust regulation working in tandem with an ever dynamic market,” said Glen.
Many asset managers, banks and insurers have shifted their base of operations out of Britain to hubs in the EU in case of a no-deal Brexit.
Brussels has made it clear that Britain will get the same degree of restricted market access that other non-EU states including Singapore and the the United States have.
Significantly, the London-dominated derivatives is worried that the clearing of euro-denominated contracts could shift from Britain to the EU.
In a survey published by FIA published consisting of 15 market participants, which account for the bulk of customer clearing volume across the EU, there was significant uncertainties surrounding the European Commission will allow Britain to continue clearing derivatives on clearing houses in Britain after it leaves the EU.
“This snapshot survey reveals that significant uncertainty remains among clearing firms regarding the UK and EU regulatory environment post Brexit,” said the FIA in a statement.