LONDON MULLS S’PORE PLAN

Pro-Brexit financiers want deregulated system to compete with Wall Street

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-onThames”, a highly deregulated British financial sector like the city-state, 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 United Kingdom Financial Services Authority, 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 European Union 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-onThames.

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

Governor of the Bank of England Mark Carney thinks differently.

He said there would be “no bonfire of financial regulation” and instead promised 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.