Nearly 350 participants from the European financial sector met in Paris on Tuesday 17 October for a conference hosted by the European Securities and Market Authority (ESMA) to discuss the current challenges experienced by the financial markets of Europe, the greatest of which is most certainly the forthcoming withdrawal of the United Kingdom from the European Union.
“Our work on supervisory convergence has become even more important in the context of the UK's withdrawal from the EU”, said Steven Maijoor, the President of ESMA, in his opening address. We cannot allow unbridled competition in regulatory and supervisory standards to attract British entities relocating their activities to the EU of 27, he explained.
However, he went on to say, preparing for Brexit “does not mean that the EU should turn its back on the UK and the rest of the globe”. The UK, which represents around two thirds of share trading in the EU on its own, will not be an “average third country”, he stressed, calling for current negotiations not to be allowed to affect the overall attractiveness of the EU.
What mainly emerged from the discussions between the participants was their concerns at the very little progress made so far for an orderly withdrawal in April 2019. They also called for a clear transition period to be set in place as well as an adaptation period - and the sooner the better.
“Brexit was already a disaster, but it will turn into a technical disaster if this is not resolved now”, said Pierre-Henri Conac, lecturer in commercial and corporate law at the University of Luxembourg, who criticised the slow progress of the negotiations and lack of transparency from the European leaders.
Sylvie Matherat of Deutsche Bank AG, one of the largest banks of the EU with financial operations in the UK, argues that there is currently a gap between the legal uncertainty that exists and the calls upon financial entities to present a Brexit plan. “We can adapt to anything, we just need to know what we are supposed to adapt to”, she explained, adding: “a few months ago, I thought that a 'hard Brexit' would be the worst-case scenario, but at least it would be ordered; ultimately, the current situation is possibly worse”.
The industry “cannot keep all its options open indefinitely”, she warned, suggesting that financial companies would end up making decisions on relocating to the EU before a political decision had been made.
When asked about the road to a “good agreement” for the EU and the UK, Elizabeth Corley, vice-president of the German group Allianz Global Investors, laid emphasis on consumer protection, calling for this not to be sacrificed on the altar of political ambition. Hans-Ole Jochumsen, vice-president of the American trading group NASDAQ, called for attention to be paid to mutual recognition and to ensure that the rules are implemented in the same way. Conac stressed the continuity of contracts and spoke in favour of creating a certain type of passport for British financial companies.
Acknowledging the legal uncertainty created by the current negotiations and the many concerns raised by businesses, the European Commissioner for Financial Services, Valdis Dombrovskis, took pains to reassure his audience, stating that his “main priority during the process will be to reduce this uncertainty as much as possible and preserve the stability and resilience of our financial markets”.
The heads of state or government will have the opportunity to discuss the state of these negotiations at Friday's European summit in Brussels. However, the industry's hopes of rapidly obtaining clarity seem unlikely to be met, as the draft conclusions of the heads of state or government, of which EUROPE has had sight, state that there will be no guidelines on possible interim arrangements available before the next meeting of the European leaders in December, at the earliest. (Original version in French by Marion Fontana)