The cross-border regulation of financial services after Brexit: What role for the EU equivalence regime?

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Apostolos Thomadakis, Francesco Pennesi

After Brexit, the UK’s financial industry will lose its EU ‘passport’. But financial providers established in the UK could still cater for EU clients on the basis of equivalence decisions adopted by the European Commission. To what extent can the EU equivalence regime alleviate the loss of passport rights for UK firms? Equivalence access is only available for certain financial services and products and can be withdrawn by the European Commission at any time.

Equivalence is a moving target. Significant amendments have been recently introduced to EU equivalence rules related to market infrastructures and the prudential treatment of investment firms, and in the amendments to the European Supervisory Authorities regulation.

This CEPS-ECMI event discussed the effects of the EU equivalence regime and its overall role in the Brexit context. It considered questions such as under what regulatory and supervisory requirements will the EU grant equivalence access to the UK? How far will the equivalence process be linked to political and non-regulatory issues? Also, how will the UK use its equivalence policy? Will it want to seek equivalence or will it be comfortable with diverging from EU regulation?