LONDON, May 6 (Reuters) - It would be wrong for Britain to
seek access for the City of London to the European Union's
markets at "any cost" if it made tailoring rules harder, the
Financial Conduct Authority said on Thursday.
Britain left the EU's orbit on Dec. 31 and its trade deal
with the bloc does not cover financial services, leaving the
City largely cut off.
The EU is assessing direct financial market access for
Britain under its "equivalence" rules. The bloc has said it was
in no rush as it wants to know how far Britain will diverge in
regulation.
FCA CEO Nikhil Rathi said Britain would use its autonomy to
regulate for the benefit of UK financial markets and consumers.
Changes to rules inherited from the EU will focus on
tailoring them to the "specificities and needs" of UK markets
and not simply diverging for the sake of it.
"And, while the likely effect of any changes to the UK’s
regulatory regime on equivalence with the EU should and will be
considered, it’s not consistent with the FCA’s objectives to
target equivalence at any cost, including the opportunity cost
of failing to make our markets work better," Rathi said in a
speech to the Association of Foreign Banks.
Separately, Bank of England Governor Andrew Bailey said
there needs to be a "very clear difference" between equivalence
and so-called location policy.
Brussels is asking European banks to relocate clearing of
euro-denominated derivatives from London to Frankfurt by
mid-2022, rather than allowing them to continue clearing in the
UK under equivalence.
"Equivalence relates to where your own residents do
business, location is the rest of the world. That's a big step
beyond," Bailey told reporters.
"I don't think that is in the interests of financial
markets, I don't think it's in the interest of financial
stability," Bailey said.
Bankers say the EU is unlikely to grant equivalence any time
soon and Britain should focus instead on speeding up efforts to
make the City more globally attractive.
(Reporting by Huw Jones, additional reporting by Kate Holton,
editing by Gareth Jones)