UK banks face renewed French push to stiffen MiFID access rule

BRUSSELS: France doubled down on a proposal that would make it harder for UK banks to do business in the European Union after Brexit.

With time running short in the divorce talks, France stepped up its push for a tightening of the MiFID II rules on how firms outside the bloc can gain access to EU financial markets. The UK is vying to protect London’s status as Europe’s financial hub, while France has pushed hard for companies to move staff and business lines into the EU. In a working paper, French diplomats in Brussels renewed a proposal that non-EU firms be forced to set up a branch in the bloc overseen by EU regulators, saying that the current so-called equivalence rules have “significant shortcomings.”

As it stands, MiFID II allows foreign companies to do business in the single market when the EU deems regulation in their home countries to be as tough as that inside the bloc.

The flaws identified by France could “threaten the integrity of EU markets” and harm the competitiveness of EU firms, according to the Sept 18 paper seen by Bloomberg.

France’s attempt to toughen the MiFID II equivalence rules comes as UK financial firms are bracing for life after Brexit, when they’ll lose the so-called single-market passport that allows them to sell services from London in any EU country.

Some EU countries are hesitant to join with France, in part because there’s little time for lawmakers to work on the legislation before the scheduled Brexit date in March followed by elections to the European Parliament, according to officials involved in the talks. The French working paper was prepared for officials from EU member states who are trying to iron out their differences on the bill. The European Parliament plans its own vote on the legislation on Sept 24. France’s permanent representation to the EU declined to comment on the paper. — Bloomberg