EU seeks post-Brexit powers
Bid to toughen rules over foreign finance firms
BRUSLS, Sept 20, (Agencies): The EU on Wednesday unveiled plans for sweeping new powers over foreign financial firms in Europe that would give the bloc strict oversight over the London financial hub after Brexit.
The draft law, presented by European Commission vice-president Valdis Dombrovskis, is intended to toughen EU financial rules and better coordinate national regulation on banking and trading in Europe.
“In the context of Brexit, we had to ... ensure that there is not a supervisory race to the bottom to attract business from London,” Dombrovskis told a news conference in Brussels.
The proposal tightens the oversight of non-EU financial companies that are allowed to operate in the bloc under so-called equivalence regimes — special bilateral arrangements already used by Wall Street, Japan and China whereby they agree to meet EU rules to keep access to the bloc’s single market.
Though Brexit negotiations are still ongoing, insiders expect that Britain and its London financial hub will mainly function in Europe under this regime once the EU divorce is completed, officially in March 2019.
Operations
“We want to make cross border operations easier for companies, more effective to monitor for supervisors, and more trustworthy for consumers,” Dombrovskis said.
The proposal addresses fears that London firms after Brexit will take advantage of fragmented national rules in the EU to seek out member states with lighter touch regulation.
The new rules complement an earlier proposal by Brussels to deny London the right to host banking “clearing houses” that deal in euros after Brexit that angered Britain.
Under the new plan, the Paris-based European Securities and Markets Authority will win vast new powers to oversee all financial services operating under the equivalency regime, including on-site spot checks to ensure compliance.
Financial firms would pay for the beefed up watchdog, according to the proposal. The reform plan will need the approval of the EU member states as well as the European Parliament, a process that could take months to achieve.
Meanwhile, calling himself a “proud saboteur” of the Brexit process, Britain’s Liberal Democrat leader Vince Cable on Tuesday appealed to opponents in all parties to put aside differences and fight a divorce from the European Union.
The fourth-largest party with 12 representatives in the 650-seat parliament, the Liberal Democrats are hoping to become the lightning rod for any rise in anti-Brexit sentiment as Prime Minister Theresa May’s government edges closer to leaving the EU in March 2019.
Cable, an economist who was business minister in the 2010 to 2015 Conservative-Liberal Democrat coalition government, has redoubled his party’s criticism of the decision to leave the EU since becoming party leader in July.
“I want our party to lead the fight against Brexit,” Cable said in his address to the party’s autumn conference. He called for a new referendum, describing Brexit as a looming disaster.
“In the real world, we have yet to experience the full impact of leaving Europe. But we’ve had a taste of what is to come in the fall of the value of the pound,” Cable said.
Sterling fell by as much as 20 percent against the dollar in the months after the June 2016 EU referendum. It has recovered around half those losses, in part thanks to increasing expectations of an interest rate hike to ease inflation, but the pound is still 9 percent down on pre-Brexit levels.
“Foreign exchange dealers are not point-scoring politicians, they make cool, hard, unsentimental judgements. Quite simply, that Brexit Britain will be poorer and weaker than if we had decided to stay in Europe,” Cable said.
He also said the government was relying too heavily on its relationship with the United States to help it adjust to life after Brexit, criticising US President Donald Trump as “volatile, and dangerous and an apologist for religious and racial hatred.”
Meanwhile, Britain’s foreign minister Boris Johnson said he was not going to resign, when questioned on Tuesday following reports that he could quit before the weekend if his Brexit demands were not met by Prime Minister Theresa May.
May is due to make a speech on Brexit on Friday and the Daily Telegraph newspaper reported that close friends of Johnson believe he will have no choice but to walk away if she advocates permanently paying for access to the EU’s single market.
Speaking in New York, Johnson was asked by reporters if he planned to resign in footage aired by Sky News.
“No ... of course not, we’re going to deliver a fantastic Brexit,” he said. “We’re working together, and the key thing is to make sure Britain can take advantage of the opportunities that Brexit provides.”