U.K. Bank Regulators Ask EU for Cooperation in Brexit Plans
(Bloomberg) -- The heads of the U.K.’s banking watchdogs called on Europe to cooperate to ensure a smooth Brexit for finance firms.
Andrew Bailey, chief executive officer of the Financial Conduct Authority, and Sam Woods, his equivalent at the Bank of England’s Prudential Regulation Authority, made their pleas in speeches to City of London executives on Thursday evening.
Bailey called on European Union supervisors to work with the U.K. to implement memorandums of understanding on issues such as cross-border supervision and data-sharing. Woods encouraged banks from other member states to opt into Britain’s Temporary Permissions Regime, a proposed stopgap for firms seeking authorization to continue to do business in the country.
“We urgently need the engagement of our EU counterparts,” Bailey said, according to a transcript of his speech at the City Banquet. “This is not just a self-serving U.K. point. It applies to both sides,” and will be important for issues including continuing the MiFID II rules after Brexit, he said.
The supervisors’ remarks show how anxious U.K. authorities are to avoid a regulatory cliff-edge, even as Prime Minister Theresa May steps up planning for a no-deal Brexit. While the political negotiations with the EU have been fraught with antipathy, Bailey and Woods addressed their audience using the language of cooperation.
That’s not to say that talks on financial regulation after the U.K. exits the bloc have always gone smoothly. Months ago, the EU rebuffed Britain’s plan for “mutual recognition” of each other’s regulations, and insisted on a form of regulatory “equivalence,” which relies on Europe judging that U.K. laws and oversight are as strict as its own.
Woods said the Temporary Permissions Regime, or TPR, is a “straightforward, common-sense way of lowering the risk of disruption to the City of London,” according to the text of his speech. He urged colleagues in other member states to engage with Britain on contract continuity for insurance and derivatives.
Woods also said the BOE is checking whether banks have enough easy-to-sell assets in the case of a financial crunch caused by a hard Brexit.
“Just in case things go badly, we have been working with firms to ensure they have in place liquidity sufficient to accommodate a severe dislocation in financial markets,” Woods said. “We all need to be ready for a range of outcomes.”
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