The UK and EU have come to an agreement on post-Brexit financial services regulations.
In a statement on 26 March 2021, HM Treasury announced the deal, which would see a new regulatory forum being created between the UK and the EU.
The forum will comprise a minister from the UK and their equivalent from the EU, as well as other officials, and will convene at least twice a year to discuss financial services.
Discussions about the future of the sector have been ongoing since January this year.
In the trade deal signed on Christmas Eve 2020, both sides pledged to sign a memorandum of understanding on financial services by the end of March.
The Treasury confirmed “technical negotiations” have now been concluded, with the memorandum of understanding (MoU), which is expected to be signed over the coming days, creating the framework needed for “voluntary regulatory cooperation.”
Further details of the deal are yet to be provided, but the move will be welcomed by markets as a positive step in UK and EU working relations.
However, the issue of equivalence and the amount of access the EU grants other countries to its markets, based on whether their rules are as robust as its own, remains unsettled.
Equivalence had been an area of contention throughout the Brexit trade negotiations. The UK had sought to secure EU equivalence before the end of the transition period on 31 December 2020. The EU refused to grant equivalence unless the UK could say how it would diverge from EU rules.
The two sides have agreed to begin separate discussions to bring the equivalence issues to a resolution.