(Adds more detail)
By Huw Jones
LONDON, March 26 (Reuters) - Britain and the European Union
agreed a new fin
ancial services cooperation pact on Friday that stops short
of reconnecting the City of London to the bloc after Brexit.
"Formal steps need to be undertaken on both sides before the
Memorandum of Understanding can be signed but it is expected
that this can be done expeditiously," Britain's finance ministry
said in a statement.
Once signed, the MoU will create the framework for voluntary
cooperation in financial services by setting up the Joint UK-EU
Financial Regulatory Forum, the ministry said.
Brussels has said an MoU will not lead automatically to
financial market access for British firms after the country's
full departure from the bloc on Dec. 31 left the City of London
largely cut off from the EU.
In January, over 6 billion euros in daily share trading left
London for Amsterdam, along with swathes of trading in
derivatives. Brussels now targeting clearing of euro swaps,
still dominated by the London Stock Exchange's LCH arm in
London.
The agreement is similar to what the bloc already has with
the United States for arranging regular, informal and
non-binding meetings of financial regulators to discuss new
rules and air any disagreements.
So far, the EU has declined to grant any long-term direct
access for financial firms from Britain, saying this week that
it was in no rush.
"Overall, for investors in UK financial services, a greater
degree of cooperation between Europe and the UK can only be seen
in a favourable light," said Alan Custis, head of UK equities at
Lazard Asset Management.
"But it still feels as though the UK needs to continue to
plough its own furrow in case there is a change of heart."
Jonathan Hill, a former EU financial services commissioner,
said this week that Britain should not sit around for access,
known as equivalence, but focus on making the City more
attractive to international investors.
"Achieving a form of equivalence with the EU is essential
but it should not detract us from the real challenge: making
London and other financial capitals in Europe more competitive
relative to the fast growing US and Asian markets," said Daniel
Pinto, chief executive of Stanhope Capital.
(Reporting by Huw Jones, editing by Andy Bruce and William
Schomberg, editing by Louise Heavens)