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UK should tweak financial rules to stay competitive after Brexit, says study

Mon, 19th Oct 2020 00:01

By Huw Jones

LONDON, Oct 19 (Reuters) - Britain should tweak financial
rules after full Brexit to keep London's financial hub
competitive and deepen ties with growth markets in Asia, a think
tank said in a study on Monday.

Britain accounted for nearly a third of financial activity
in the European Union, which it left last January, and will no
longer have to comply with its rules after Dec. 31.

New Financial said in its study "Beyond Brexit", supported
by Barclays bank, that leaving the EU would be a seismic change
and involve significant disruption for the banking and finance
industry's relations with the bloc.

Britain is unlikely to get much direct access to the EU
financial market but will be a significant "free agent" that can
use its expertise in derivatives, trading, fintech and
sustainable finance to shape global standards, the study said.

Big, strategic decisions will be needed but a moratorium on
substantial divergence from EU rules for at least a year would
give banks a chance to adjust to the new world, it said.

"While the geopolitical backdrop is acutely challenging we
think there is an opportunity to develop trade in financial
services and closer partnerships with markets like the U.S.,
Japan, Switzerland, and other smaller markets such as Singapore
and Australia," the study said.

Tweaks to bank and insurance capital requirements, taxation
and supervision would help London stay competitive globally, the
study said.

Britain should set up a commission to review the
competitiveness of the UK financial sector, the study said.

UK regulators have pushed back against calls from lawmakers
to be given a formal remit to keep London's financial
competitiveness in mind when writing new rules.

The study comes ahead of the anticipated publication of the
government's financial services bill setting out a post-Brexit
model for regulating finance and keeping it competitive.

(Reporting by Huw Jones; Editing by Mark Potter)

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