S’pore-on-Thames? London mulls post-brexit future

LONDON: With a crucial election, Brexit and potential trade deals looming, the future of the beating heart of Britain’s financial sector will be shaped in the coming months.

The spectre of a “Singapore-on-Thames” – a highly deregulated British financial sector like the citystate – is the dream of some pro-Brexit financiers, who have criticised European rules that they believe are holding them back.

But regulators don’t appear to be in a mood to tear up the rulebook just yet.

“It has been 10 years since the financial crisis and the subsequent reforms we put in place, and now is the right time to review our approach to regulation,” Nausicaa Delfas, from the UK Financial Services Authority (FCA), said this week.

“Brexit provides added impetus to look at things again.”

At a London conference on the issue, Barnabas Reynolds, who specialises in UK and EU regulation at law firm Shearman & Sterling, said the regulators should look at everything.

Like many in the City – the financial hub in central London – he did not see “what’s wrong” with the idea of a Singapore-on-Thames.

European financial rules, although designed under Britain’s influence, have restricted the sector’s ability to compete with Wall Street, he added.

The Governor of the Bank of England, Mark Carney, thinks differently.

He says there will be “no bonfire of financial regulation” and instead promises a “dynamic” approach to “optimise our efforts without compromising on the level of resilience”.

Most of the financial community is convinced that Britain, whose financial rules are currently aligned with those of the EU, has no interest in moving too far away from them at the risk of being denied access to the vital common market.

“We have been on a trajectory of improving the regulation rather than weakening it,” Iris Chiu, a law professor at University College London, said.

But some sensitive areas will be in the spotlight as soon as Brexit is completed, such as limits on bank bonuses or possible supervision of the booming fintech industry.

“Fintech is one area where the UK is seen as an international market leader” and it will want to defend its position, said Sarah Hall, from “The UK in a Changing Europe” think-tank.

This could mean applying a lighter touch to start-ups in the sector with regards to transaction traceability, customer data or the origin of funds.