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By Andrew MacAskill and Huw Jones
LONDON, Jan 12 (Reuters) - Britain's finance industry hasgiven up on efforts to keep full access to the European Unionafter Brexit and is pushing instead for a more limited tradedeal that would potentially exclude some financial products.
Banks, insurers and asset managers have come to theconclusion there is no realistic chance of maintaining fullpassporting rights after Brexit that would allow them to sellall their services across the 28-nation bloc from Britain.
TheCityUK, the country' most powerful financial lobby group, has listed 17 points in a two-page document published onThursday that calls for limited market access for some financesectors based on a pact in which Britain and the EU would accepteach other's rules. This would keep the door open forcross-border trading of stocks and bonds, and sales of certainother products.
The future of London as Europe's financial centre is one ofthe biggest issues in Brexit talks because it is Britain'slargest export sector and biggest source of corporate taxrevenue. There have been estimates that Britain's financeindustry could lose up to 38 billion pounds ($46.07 billion) inrevenue in a so-called "hard Brexit" that would restrict itsaccess to the EU single market.
TheCityUK proposals mark a shift away from calls for fullpassporting rights to be maintained for the finance industryafter Brexit.
"I am confident that this represents in broad shape the keypriorities for the industry," TheCityUK Chief Executive OfficerMiles Celic told Reuters.
"There are a multiple number of documents out there of stuffat significant length. So there was a sense among our membershipto filter down what the key asks were into a single place."
By pushing for a bespoke deal there is a risk that somefinancial sectors may be excluded from any final settlement.With some bankers expecting no market access for some retailfinancial products.
But TheCityUK document is the first attempt to condense theindustry's priorities after months of conflicting lobbying, andcomes just two months before Britain plans EU divorce talks.
Until now, finance organisations have clashed over whoshould be leading efforts to lobby the government and what theirBrexit response should be.
After the June vote, business leaders begged for Britain tostay inside the single market, for example, by having aNorway-style deal that would provide full access to Europe'smarkets.
But EU leaders have repeatedly warned that single marketaccess is defined by the bloc's four freedoms - free movement ofgoods, capital, services and people - and that they cannot beunpicked.
Prime Minister Theresa May said on Sunday she was notinterested in Britain keeping "bits" of its EU membership, seenby some as a signal that Britain will leave the single marketwhen it leaves the European Union.
Britain should seek "access to the widest possible range offinancial and related professional products and services," theTheCityUK document says, implying some sectors may lose accessunder any final deal.
TheCityUK proposals call for "clear and upfront transitionalarrangements" to bridge the gap between leaving the EU and thestart of a bespoke deal, though they do not specify a timeframe.
Three top financiers, HSBC Chairman Douglas Flint,London Stock Exchange CEO Xavier Rolet, and AllianzGlobal Investors Vice Chair Elizabeth Corley, calledon Tuesday for transitional arrangements to last two to threeyears after Brexit.
Trade experts have warned that a bespoke trade deal couldtake far longer. Brexit supporters want a quick break with thebloc.
TheCityUK document favours a deal that would build on and gobeyond existing so-called equivalence regimes, whereby UKfinancial firms could continue to serve European customers ifthey complied with rules the EU deems to be equal.
It said that for all products, a mutual recognitionarrangement is needed, along with a framework for "recognisingand enforcing judgments from UK jurisdictions in the EU and viceversa."
This refers to the derivatives sector, where currently swaps contracts negotiated between firms in all EU countriesrely on UK court rulings to resolve disputes.
TheCityUK document also highlights some positive effects ofleaving the EU, in a marked shift from the finance industry'slong-held view that staying an EU member would be the preferredoption.
"There will be opportunities arising from Brexit, includingfrom new networks of trade and investment agreements, thecreation of Sharia-compliant central bank liquidity facilitiesand FinTech," the document said.($1 = 0.8248 pounds) (Editing by Jane Merriman)
