European banks seek access to trading markets
Eurozone banking groups want access to London’s derivatives market – a multi-billion dollar market – and other major markets.
Financial trading bodies postulate the bloc is on the edge of the cliff unless it moves to further expansions that allow European Union trade to continue in the UK and other major markets.
All of this is a blow to Brussels’ plans to take over London’s business.
A letter this month from several organizations, including the International Swaps and Derivatives Association, the European Association of Cooperative Banks, the European Banking Federation, the Futures Industry Association, the Global Financial Markets Association and the Nordic Securities Association, requested extensions.
“If the temporary [arrangements] are allowed to expire without being replaced by equivalency decisions in all key jurisdictions, this will lead to increased costs and operational burdens for EU companies while also leading to trapped assets ”, the letter noted.
Currently, EU banks rely heavily on the London market to help settle transactions between institutions. The process is important for ensuring the proper functioning of financial markets.
However, the European Commission has not granted Britain “equivalence status” for trade in derivatives since Brexit – even though Britain’s post-Brexit rules are quite similar.
The letter says trade bodies have asked Brussels to grant trade authorizations for an additional three years instead of letting them expire at the end of June next year.
PYMNTS wrote that the UK, in trying to figure out how things would work in the aftermath of Brexit, had explored an idea to expand the roles of financial regulators.
Read more: UK expands obligations for financial regulators
The report says the UK wants regulators to contribute to financial growth and competition, alongside their usual tasks.
This will help give regulatory agencies more freedom and allow them to do things like rewrite the rules for IPOs, green finance, and crypto.