On February 2, 2017, the Department for Exiting the European
Union, the department of the UK government tasked with extricating
the UK from the EU, published a white paper on the UK's exit
from and new partnership with the EU. The white paper contains
further detail on the UK government's approach to financial
services in sections 8.22 to 8.26.
The white paper states that the UK government will target the
following aims in its negotiations with the EU in respect of the
financial services sector:
Achieving the "freest possible trade" in financial
services between the UK and EU member states.
Establishing strong co-operation and oversight arrangements
with the EU, reflecting the interconnectedness of financial
markets. The paper suggest that the UK will continue to support and
implement international financial standards.
Negotiating on the UK's future status and arrangements with
regard to EU agencies, including the European Supervisory
Authorities (ESAs) (that is, ESMA, EIOPA
and the EBA).
Agreeing on a "phased process of implementation" to
allow for the UK and the EU to prepare for the new arrangements
that will apply following the UK's departure from the EU. It is
suggested that the phased process might relate to the future legal
and regulatory framework for business. In any event, the UK
government will take steps to mitigate the impact on economic and
other functions, including passing legislation if necessary.
The UK government argues that factors such as the UK's legal
system, language and infrastructure will help to ensure that it
remains a preeminent global financial center after the
implementation of Brexit.
Further to the publishing of the white paper, the Financial
Markets Law Committee published a letter on February 3, 2017,
addressed to Andrew Tyrie, Treasury Select Committee chair,
commenting on the UK's financial services industry in the
context of the UK's withdrawal from the EU. The letter has been
written in response to the Committee's inquiry on the UK's
future economic relationship with the EU. The letter notes that
post-Brexit, the UK will lose access to the European single market
in financial services and will become a third country from the
perspective of EU law. The letter notes that there are serious
uncertainties as to the conditions that the UK and regulators will
have to satisfy as a third country. As such, staged transitional
arrangements negotiated well in advance of the UK's withdrawal
from the EU will be valuable in promoting legal certainty and
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