Financial markets should be ready in case of cliffhanger Brexit: Britain’s Financial Conduct Authority

On Thursday, Nausicaa Delfas, executive director of international at Britain’s Financial Conduct Authority stated, it would be prudent for financial firms in Britain to be ready in case Britain does not sign a trade deal with the European Union by December.

Britain is set to leave the European Union next week, followed by a “business as usual” transition that ends in December.

Britain and the EU are scheduled to hold trade talks in the coming weeks.

“Firms still need to ensure they are prepared for a range of scenarios that may happen at the end of 2020,” said Delfas.

Britain’s much vaunted financial industry is hoping to get access to the EU’s market after December under the EU equivalence system.

On its part, Britain has placed all EU financial rules into its laws, which means it will have “the most equivalent framework to the EU of any country in the world,” said Delfas.

Britain will have to decide whether EU-based financial firms can gain access to UK investors under the same equivalence system it has inherited by adopting the EU laws.

“This provides a strong basis for the EU and UK to find each other equivalent across the full range of equivalence provisions,” said Delfas.

He went on to add, “As both the UK and EU are committed to open markets, there is also a strong rationale for both sides to discuss broadening their respective equivalence frameworks”.

While the EU is scheduled to complete its equivalence assessments by the end of June, banks apprehend it could be overshadowed by broader UK-EU trade talks.

“We believe that equivalence decisions should be based on technical assessments,” said Delfas while adding, equivalence should be determined on the “outcomes” of respective rules rather than a need to be written identically.

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