Concern about race to bottom

REGULATORS should prevent investment firms from setting up shop in one jurisdiction to avoid stricter controls in their home state, the EU’s markets watchdog said yesterday, as Dublin, Frankfurt and Paris vie for business. EU authorities are concerned about a “race to the bottom” as financial services firms shift operations after Britain leaves the bloc in 2019, amid reports businesses are being set up that are effectively no more than postal addresses to take advantage of more lenient rules in some countries. Ireland has complained to the European Commission that it is being undercut by rival centres. National securities regulators should “mitigate the risk of letter-box entities and ensure that any relocation is effective”, the European Securities and Markets Authority said.