November 30, 2018 AtoZ Markets– The UK The Financial Conduct Authority (FCA) reported yesterday, 29th Nov., that the currently reached-to Brexit draft has yet come up with a no-deal exit, as Britain prefers, in spite of that would leave the latter without a say over EU financial regulations.
The details read that the parliament’s Treasury Select Committee had requested the FCA report to inform members of Parliament prior to voting on the Brexit deal and declaration on future trading relations with the EU on Dec. 11.
Financially speaking, the finance ministry and the Bank of England said in a statement on last Wednesday: “An exit without agreement would carry much higher risk and carry significant uncertainty for us and for firms,” the FCA said in its report.
“Against that background, and viewed through the lens of our statutory objectives, the draft Withdrawal Agreement and the outline political declaration are preferable steps.”, the BoE added.
Blockage to UK’s firms is looming in the horizon
In his turn, FCA Chief Executive Andrew Bailey explained that the regulator sill wishes to keep the transition period “to a minimum”, stressing the necessity of negotiating future trading relations as soon as possible.
The regulatory labels reveal there are over 30 financial rules being negotiated in the EU, and starting from next March on, Britain will have no say over them, as per the FCA said, where Britain must apply existing and new EU rules during transition and any extension that follows.
The British financial watchdog explains that a transition period or an implementation from March till the end of 2020, would help a “cliff-edge” risks and pave the way for the UK’s transition process to a new relationship with the EU, as the withdrawal agreement outlines.
The declaration dictates that future relations between the UK and the EU will stand on the Bloc Equivalence system, where access depends on UK financial firms to follow the rules that are similar to their those implemented in the EU. Still, that will not cover bank lending, deposits, and some other insurance activities, with the capability of withdrawing them at a short notice.
On the EU’s side, the latter would complete its “equivalence” determinations for UK companies by the middle of 2020, as per the declaration.
The declaration, as the FCA sees it, “provides for close regulatory engagement and the possibility for a much better relationship than a standard third country position”.
A no-deal Brexit interprets in financial firms losing “unfettered access” to the EU’s investors, the thing that will oblige them to depend on the World Trade Organisation’s rules and on EU or national member state rules for non-EU states, the FCA says.