City of London calls for permanent EU market access for UK clearing houses

Chris Hayward, Policy Chairman at the City of London Corporation, told Euronews on Monday that British financial firms are keen to retain their equivalence — the recognition that Britain’s regulatory standards are on par with EU rules.

“I think there’s still the possibility of that. That’s in negotiation, it’s in discussion, and we would continue to push for that,” he said.

The City of London lost unfettered access to the EU’s Single Market after its divorce with the bloc and financial services were not included in the post-Brexit Trade and Cooperation Agreement (TCA) thereby limiting its access. 

EU financial firms are keen to capture that business, and Mairead McGuinness, the EU Commissioner for Capital Markets, has indicated Britain’s access will be cut after 2025. 

Hayward, however, said the UK is unlikely to diverge from high regulatory standards and equivalence should be granted.

“Obviously, we’ve now got our own regulatory rules up to our Financial Services and Markets Bill, but we don’t want divergence for divergence sake. 

“At the end of the day, the UK was instrumental when we were in the EU in writing a lot of that regulation. So the key thing now I think is to rebuild trust,” he told Euronews.

The City, he added, has held up its position as the world’s leading financial centre despite some limitations imposed as a result of Brexit.

“I was a Remainer all along and I was very, very frightened when the Brexit vote came along because I felt we would lose tens of thousands of jobs to the EU on the back of it. 

“In truth, in the financial services sector, we’ve lost 7,000 jobs, mainly through passporting, mainly coming out of the banks. But we also have the creation of new jobs. And actually post-COVID we now have a record number of jobs in the City of London,” he said.

Equivalence with the EU is seen as key for that leading position to endure. 

Hayward called on the next British government — a general election is scheduled to be held in the UK in 2024 — to work on building up trust with the EU once more following seven years of often confrontational and bitter rhetoric.

“There’s been a lot of damage done to trust. And so much is done on trust between nations and between politicians. And I think the challenge for whoever is the next UK prime minister is how do we rebuild the bond and trust with our biggest financial services trading partner which is the EU,” he said.