The United Kingdom’s financial market rules will remain largely aligned with those of the United States and the European Union to minimize disruption to global companies, according to Andrew Griffith, the UK’s financial services minister. Speaking at the FIX trading conference, Griffith stated that the “Edinburgh Reforms” would bring proportionate, modern, and high-standard regulation to the country.
Since the UK’s departure from the EU in 2020, the UK has been under pressure to strengthen London’s position as a center for listing companies, following a rebuff from Arm, a British chip designer. The US and EU have also proposed market reforms, and global banks are looking to avoid major divergence in rules that could increase their costs.
Griffith emphasized that the UK has a “clear vision” of ambitious practitioner-led reforms that will help the country’s regulation be more proportionate, simpler, modern, and based on high standards. He said the UK is already building great relationships with its European and US counterparts and wants to stay in the regulatory orbit as much as possible, adding that the UK seeks to remove friction from the system, not add to it.
When writing rules, the UK’s regulators will have to consider the sector’s international competitiveness, Griffith said, adding that the country would only do so in a balanced and orderly way.
Danuta Huebner, a European Parliament member who is leading the reform of EU securities rules, said the Edinburgh Reforms put increased emphasis on risk-taking and competitiveness. However, it was unclear whether this would lead to divergence from the EU. She stressed that the language being used on both sides of the Channel is one of reform rather than divergence and that the UK and EU are on a path to normalizing post-Brexit relations.
Earlier this week, the 27-member bloc announced that it would activate a new forum for UK and EU regulators to exchange views. The move is key to easing tensions over issues like derivatives clearing.
The announcement by Griffith follows a period of uncertainty for London’s financial services sector, which has struggled to find its footing after Brexit. Many in the industry have expressed concern that the UK’s departure from the EU could result in a loss of business to other financial hubs, such as Frankfurt or Paris. However, the UK government has sought to assure businesses that it will take steps to ensure the continued growth and success of the sector.
The Edinburgh Reforms were first proposed in 2020 and seek to create a more flexible and dynamic regulatory framework that can adapt to changing market conditions. The reforms will also help the UK to maintain its position as a leader in financial services, according to Griffith.
The UK’s decision to align its financial market rules with those of the US and EU has been welcomed by many in the industry. Banks and other financial institutions had feared that the UK could become a “third polarity” with its own set of rules, leading to increased costs and complexity. The move to remain aligned with the US and EU rules will help to reduce these concerns, according to industry insiders.
The activation of the new forum for UK and EU regulators is also seen as a positive step towards resolving some of the issues that have arisen as a result of Brexit. The forum will provide a platform for regulators on both sides to exchange views and ensure that regulations are consistent across borders.
The UK’s decision to align its financial market rules with those of the US and EU is seen as a positive step towards ensuring the continued success of the country’s financial services sector. The move will help to reduce costs and complexity for businesses operating in multiple jurisdictions, while also ensuring that regulations remain consistent across borders.