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financial markets and fishing February 5, 2018

Posted by Bradley in : brexit , trackback

Good speech by Andrew Bailey of the Financial Conduct Authority here. And a nice contrast to the general dithering going on in other parts of government (for example the (in)decision to put off the publication of a white paper on immigration until the fall). Bailey discusses the importance of getting the technical details of any transition right and argues that it should be done by means of an agreement between the EU and the UK to avoid glitches. And he points out that it ought to be possible to imagine an agreement:

if it is possible to envisage a partnership agreement on fishing based on convergence of regimes, of course it is possible to have open financial markets and mutual recognition of regulatory regimes… The principles for mutual recognition would look a lot like the ones we already use to authorise the branches of banks from outside the European Economic Area, namely broad equivalence of regulation in terms of outcomes, supervisory co-operation and good information sharing. We would need to add on a robust dispute resolution arrangement, but this could be done. We are used to working very closely with other regulators, it is a big part of our job given London’s international role.
And let me comment on the negative arguments – ie the arguments against not having mutual recognition. First, it is not sensible to imagine material regulatory divergence, especially in wholesale financial markets. It is a false concept. Markets are global and we cannot in practice diverge much in terms of regulatory outcomes, and regulatory arbitrage is not an allowable ground for competition.


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