UK watchdog sees no big divergence from EU securities market rules

LONDON (Reuters) – Britain will only diverge from European Union securities rules in “exceptional” circumstances given that the UK played a key role in shaping them and still supports their objectives, a senior Financial Conduct Authority official told lawmakers on Tuesday.

“Areas where we would diverge are the exception rather than the rule,” Edwin Schooling Latter, FCA executive director for wholesale markets, told a parliamentary committee.

Britain left the EU in January and full access to the bloc’s single market for UK financial firms ends on Dec. 31.

The EU is still assessing whether to give financial firms in Britain more access to the bloc from January, beyond temporary permission for derivatives clearing houses in London.

EU access is based on Brussels deeming that UK rules are and will continue to remain “equivalent” or aligned to those in the bloc, but Brussels first wants Britain to say how far it will diverge from EU rules.

Schooling Latter said Britain played a big role in shaping the EU’s “MiFID” securities rules and still supported it overall now that it has been embedded into UK law.

“Some area in the MiFID regime where we could look at approach that was better calibrated to UK capital market infrastructure,” Schooling Latter said.

The EU has so far not said if it would allow share trading platforms in London to keep serving EU investors under MiFID related equivalence, and avoid shifting euro-denominated share trading to their new EU hubs in Amsterdam and Paris.

Simon Hills, a director at banking body UK Finance, said Britain’s regulators should avoid watering down globally agreed bank capital standards as this could make life difficult for foreign operations of UK lenders.

“We want people to bring their money to the City… It’s not in anyone’s interest to diverge from internationally agreed frameworks because there is the risk we bring in the wrong sorts of people,” Hills told the lawmakers.

Banks in London have moved 7,500 jobs and a trillion pounds in assets to new EU hubs to avoid any disruption from a lack of EU access from January.