In a significant milestone since Brexit, officials from the UK’s finance ministry and the European Commission held their first official regulatory cooperation forum to discuss a range of financial and geopolitical issues. This inaugural meeting mirrors similar setups the European Union has with other nations, such as the United States, for the purpose of discussing regulatory matters.
The meeting took place in London last Thursday and aimed to establish a cooperative framework for ongoing discussions and information exchange between the UK and the EU on various financial and regulatory topics.
In a joint statement issued on Monday, the two parties highlighted their discussions on several key subjects. The first point emphasized the risks related to the “current challenging geopolitical situation.” While the statement did not provide specific details, it underscores the importance of assessing and addressing geopolitical risks that can impact the financial sector.
Additionally, both sides reaffirmed the resilience of their respective financial sectors, suggesting that the ongoing collaboration aims to ensure the stability and robustness of these sectors amidst various challenges.
The meeting also touched upon other critical issues, including the need to pursue international reforms that address vulnerabilities outside the traditional banking system. This recognition of the importance of non-bank financial institutions in the regulatory landscape reflects the evolving nature of the financial industry and the need for comprehensive reforms.
Moreover, both parties discussed broader financial reforms, which are actively being pursued on both sides. These reforms may involve changes to regulations, policies, and market structures to enhance the integrity and efficiency of the financial sector.
Looking ahead, the next meeting of the regulatory cooperation forum is expected to take place in the spring of 2024 in Brussels, the heart of EU policymaking. This continued engagement highlights the commitment to ongoing collaboration between the UK and the EU in the realm of finance and regulation.
The establishment of this forum was envisioned as part of the Brexit deal between the UK and the EU. However, the actual creation of the forum faced delays, primarily due to disputes surrounding trading relations in Northern Ireland. These issues were eventually resolved earlier this year with the Windsor Agreement, allowing the forum to move forward.
It’s essential to clarify that the regulatory cooperation forum’s primary purpose is not to decide on EU market access for UK financial services. As of now, UK financial services have limited access to the EU market due to Brexit-related changes. Instead, the forum serves as a platform for regulators from both sides to discuss upcoming rules, especially in cases where there may be regulatory divergence. This dialogue aims to prevent potential conflicts and disputes in the future.
For the financial sector, this forum represents an opportunity to establish political trust between the UK and the EU over time. It may serve as a foundation for building a more cooperative and stable long-term relationship, potentially paving the way for improved access to the EU market for UK financial services. The significance of this development is highlighted by the fact that the EU is currently working on legislation to reduce EU banks’ reliance on derivatives clearing houses in London, with UK clearers’ access to EU customers set to expire in June 2025.
In summary, the inaugural regulatory cooperation forum between the UK and the EU marks a crucial step towards ongoing collaboration and dialogue on financial and regulatory matters. It offers both sides the opportunity to address challenges, understand upcoming regulatory changes, and potentially build the trust needed for enhanced market access in the future. This engagement reflects the evolving landscape of the financial sector and the importance of international cooperation in addressing global financial challenges.
