In the background of several investment institutions and banks moving their branches out of the UK, British lawmakers are considering how regulation and supervision can evolve to maintain access to the European Union (EU) market after Britain leaves the bloc in 2019, according to Reuters.
This would, of course, need the nod from the European lawmakers as well, as they are engaged in tough and close negotiations with their British counterparts over the Brexit process. It is still unclear how the rules of engagement and trading terms will pan out post-Brexit and it is highly likely that the financial sector will be the most affected.
Already, many financial institutions are preparing for a hard Brexit, in which their access to the EU market will be cut off. With this set to affect their business and regulations a great deal, they have shifted many of their offices and business functions to other cities in Europe, such as Frankfurt.
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This has led the sector to persuade the government to ensure that there is a smooth transition period, and the House of Lords financial affairs committee is likely to examine how it can achieve that by maintaining as much access to the EU market as it can.
The committee chairwoman, Kishwer Faulkner, said in a statement: “We would like to explore the options for such engagement”.
One option available to the government would be to frame rules that are very similar to the ones in the EU in return for full access, but it is possible that the results of such rule changes would be far too unpredictable.
The committee is set to start public hearings in September, by which time the Brexit negotiations will be fully underway – more clarity is likely to emerge by that stage.