FCA CEO Andrew Bailey BREXIT Speech

"The specific UK issue is, of course, Brexit and what that means for trade in financial services. I should emphasise that on Brexit, our job at the FCA is to roll our sleeves up and play our part in implementing the decision made by the people of this country to leave the European Union, and what goes with it."

"There are reasons for thinking that the circumstances for a major step forward in open markets in financial services are unpromising. On the contrary, I think we can make the opposite argument, that now more than before there is an opportunity to achieve something. For those who believe in free trade and open markets, it is a prize worth trying for."

"One of the purposes of this review of trade policy is to draw out the themes that have run through history. One of those themes, the relevance of which today is obvious, is regional trading blocks.  The essence of the debate over time has been whether such blocks can be complementary and mutually reinforcing to a multilateral trading system or inherently discriminatory, Another way of putting this is whether they violate the Most Favoured Nation principle in terms of the treatment of members and non-members."

"Regulation can be a less benign influence on open markets, because it can operate as a barrier to trade itself, particularly where it is structured to prevent openness. It is a feature of recent times that liberalisation of services markets has come via regulatory reform in many countries, with the consequence of opening up to trade. Financial services are no exception to this pattern."

"I strongly believe in free trade and open markets in financial services, particularly wholesale services. Almost since Bretton-Woods there has been a debate on whether regional trade blocks stimulate or restrict trade, and likewise whether or not they are consistent with Most Favoured Nation provisions. Today in the UK, we stand at a point where we have the basis for effective open financial markets and free trade supported by the regulatory reforms post-crisis, but a threat to achieving that outcome in the form of reactions to Brexit. Trade theory tells us that such a threat is bad all round, not just for the UK."

"Regulators must work together and cooperate to ensure financial markets support these goals. This means that where markets are global/cross border, we should cooperate to ensure frameworks are consistent in terms of outcomes and that opportunities for regulatory arbitrage are minimised. And, where markets are local, we should share best practice and promote common approaches wherever appropriate."

"We need to consider how we move towards our future relationship with the EU, whatever that may look like. If we are to promote open and innovative financial markets then, wherever firms operate cross-border, they should be able to continue doing so under the terms of the new relationship. This should be as seamless a process as possible, avoiding any interruption in the supply of services. It is by working multi-laterally that the best progress can be made."

And if firms lose the right to operate cross border, then they should be afforded sufficient time to restructure or take other action necessary to avoid a cliff edge, including enabling firms to meet outstanding contractual obligations in order to ensure continued consumer protection in the EU and UK, and certainty for financial markets."

"There should be a strong preference to preserve cross-border operating where it is consistent with the overall standards.  Any agreement on market access must be clear and sustainable to provide confidence in its long-term operation. Trade in financial services can only flourish when built on a stable base that firms and regulators can understand and rely upon. The Most Favoured Nation principle of non-discrimination should be at the core of any agreement. It should provide for equal treatment under its terms. It should not allow jurisdictions or firms to be discriminated against because of where they are based. And where market access is predicated on commonality of rules, this should be determined by taking a proportionate and outcomes based approach, focusing on whether rules address the same risks while seeking to avoid market distortion or regulatory arbitrage. It should also take into account the extent to which rules are aligned with international standards."




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