City of London Wants Regulators’ Help Competing After Brexit

(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. 

With Britain on the verge of quitting the European Union, the country’s financiers are asking the U.K. government to revamp regulations to attract global business.

Watchdogs should have the power “to make the U.K. a better place to do business” through a new mandate to support London’s financial hub against rivals, according to the International Regulatory Strategy Group, a panel sponsored by the City of London Corp., which administers the financial district, and TheCityUK lobby group.

The financial industry has faced an uphill battle to get its way in the negotiations over Brexit since the 2016 referendum. Much cross-border business depends on keeping close alignment with the EU’s rules, yet the U.K. government has signaled its willingness to break away on several fronts.

Read more: London’s Future Now Really Up For Grabs in Next Brexit Phase

The U.K.’s withdrawal from the bloc on Jan. 31 offers a chance to review the financial rules “so that they continue to support global standards and reflect domestic priorities,” Mark Hoban, chair of the group and a former Treasury minister, said in a statement Thursday.

The report called for a broad review of the U.K.’s regulatory objectives, a consolidation of rules to lower costs on the industry and more transparency and scrutiny of watchdogs’ decisions. Still, the industry is keen to avoid a “regulatory race to the bottom,” the groups said.

Sajid Javid, chancellor of the exchequer, said last week that Britain doesn’t intend to simply align regulations with the EU after the U.K. leaves.

The Financial Conduct Authority‘s head of international, Nausicaa Delfas, said in a speech Thursday that the City has a “strong basis” to achieve equivalence with the EU, while the future relationship with the bloc would be “not about whether we have identical rules, but whether they achieve common substantive outcomes.”

Any move to split from the rules in Brussels will likely complicate life for global banks that rely on hubs in London to access the EU’s markets. The EU will consider about 40 equivalence decisions this year that will determine how much equity, fixed-income and other investment banking business can remain in London and still serve clients on the continent.

©2020 Bloomberg L.P.