LONDON (Reuters) -Britain’s finance minister pledged on Thursday to “sharpen” the competitive advantage of the UK financial services sector as he set out his vision for its future after Brexit.
Brexit has largely severed the City’s ties with investors in the EU, triggering a shift in over 7,500 financial jobs from London to new hubs in the bloc.
Last year the finance ministry rolled out reviews to listings rules, fintech and insurance capital rules, and on Thursday it announced there would be further public consultations on financial reforms.
Sunak said rules on prospectuses, which give investors information about companies that want to list, would be reviewed so that “more companies can and do list on UK markets.”
He said a review of capital markets would focus first on “immediate changes” to remove the “most ineffective and distortionary regulatory requirements” that Britain inherited from the EU, such as the share trading obligation and double volume cap.
These refer to rules that require banks to trade on a particular platform, and curbs on how much share trading can take place off an exchange in the “dark”.
The finance ministry will also set out how it wants to see insurance capital rules amended following its consultation, he said.
There will be a public consultation on safeguards on access to cash after the pandemic accelerated a trend towards cashless payments and bank branch closures.
Sunak said there will be new sustainability disclosure requirements for companies to report on the impact they have on the environment, a step the EU has already taken.
To date, sustainability disclosures look only at how climate change affects a company’s financial performance. Sunak will publish more details before the U.N. COP26 climate conference in Glasgow in November.
Miles Celic, CEO of TheCityUK which promotes UK financial services abroad, said there was a need to ensure a compelling proposition for Britain to remain a world leading financial centre.
“This includes simplifying our regulatory regime while maintaining its quality and strength, providing certainty and clarity with a business tax roadmap, and enhancing efforts to attract and retain the talent we need,” Celic said.
NUANCED CHINA STRATEGY
The financial sector was largely left out of Britain’s trade deal with the EU, cutting lucrative ties with investors in the bloc, and the industry wants a government strategy for the City.
The EU has yet to decide how much direct access it will grant the City in future, while trying to engineer a shift in clearing in euro derivatives from London to Frankfurt.
Sunak said the EU would never have cause to deny Britain access because of poor regulatory standards.
“So I see no reason of substance why the UK cannot or should not continue to provide clearing services for countries in the EU and around the world,” he said.
Sunak said Britain could take a more nuanced approach to serve the fast growing Chinese financial services market of 40 trillion pounds while still taking a “principled stand on issues we judge to contravene our values”, a reference to human rights.
He said Britain wanted to deepen ties with the United States and would establish a “ground-breaking” system of cross-border access for the sector with Switzerland. Such access based on non-EU member Switzerland and Britain recognising each other’s financial rules was rejected by Brussels.
The government on Wednesday set out details for the sale of Britain’s debut sovereign green bond or gilt, and a green savings bond.
Reporting by Huw Jones; Editing by Toby Chopra and Timothy Heritage