The United Kingdom and the European Union announced last week that they had reached an agreement to move forward with the transition Brexit deal which is expected to be completed by the end of 2020.
BoE Assures Financial Firms OF BAU
The Brexit move has caused a lot of market confusion in the last 18 months as some of the major financial firms have discussed the possibility of re-locating out of London and setting up their firms in the EU. The Bank of England (BoE) decided that it was in its best interests to send out a fresh assurance to financial firms in the City of London assuring them that while Brexit transition is implemented, it will still be business as usual for all financial firms.
This means that financial firms, lenders and clearing houses operating in London will not be affected by the Brexit deal till December 31, 2020 as their passporting rights will continue to be the same. They will be able to use their existing licenses to continue to operate in London and not have to apply for any new regulatory approval.
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The current laws allow companies who have passporting rights to operate in the UK to also operate in the EU. Once Brexit is implemented, these firms will have to comply with the new regulations outlined.
EU Regulators Need To Provide More Info
Financial firms in the UK were happy with the assurance provided by the BoE which stops them from immediately pushing through with hasty and costly steps in the light of the Brexit transition. Now that the UK has clarified things from their perspective it will be up to EU regulators to release more information and make things a lot more transparent for financial firms.
In a statement, Stephen Jones, UK Finance CEO said
The impetus is now on EU regulators to follow suit, and for both sides to work together on cross-border models of supervision that businesses on both sides of the Channel can rely on throughout the implementation period. Without similar assurances from EU regulators, UK-based firms serving customers in the EU will be forced to continue implementing costly contingency plans
A new Reuters study published this week showed that the number of finance jobs expected to move out of London and be created overseas has halved in the last six months and fallen to 5,000.
