The EU, with the exception of Ireland, lags behind Britain in its no-deal preparations "by some way", the Confederation of British Industry said on Sunday.
LONDON/BRUSSELS: The European Union is set to block some countries from accessing parts of the bloc's financial market for the first time, an EU document seen by Reuters showed, a step that will ring alarm bells in Britain in the run up to Brexit.
The document takes stock of the EU's so-called "equivalence" system, under which Brussels grants financial-market access to non-EU banks, investment firms, clearing houses or credit rating agencies if it deems their home rules to be suitably aligned with those of the bloc.
It is the system that Britain will likely have to use after it leaves the EU if UK firms are to avoid the expense of setting up new financial hubs in the bloc.
The European Commission posted notices on its website earlier this year showing it intended to withdraw equivalence for credit rating agencies in Australia, Brazil, Singapore and Argentina as they had not matched tougher rules for regulation of such agencies in the bloc.
The draft document, due to be published by the European Commission next week, confirms the equivalence will be revoked because of the divergence in regulation.
The EU has adopted over 280 equivalence decisions involving 30 countries outside the bloc and has never withdrawn one before.
The move is a stark warning to Britain that it would have to stay aligned with EU rules if it wants its trading platforms, clearing houses and other financial firms to have direct access to customers in the bloc.
"The Commission directly informed the jurisdictions affected about its intention to repeal their equivalence regime and offered an opportunity to the third-country authorities concerned to come back," the document said.
"This illustrates how monitoring may result in reviewing decisions, including repealing where justified."
RIGOROUS
The Bank of England and Britain's Financial Conduct Authority have said that Britain, home to one of the world's biggest financial centres, must not become a "taker" of EU rules.
But bankers expect the EU will be rigorous when it comes to deciding if Britain can have equivalence based market access given that the bloc is keen to build up it own capital market.
Britain has called for "enhancements" to make the equivalence system more predictable and transparent - in theory it can be withdrawn with a month's notice.
The EU's document stresses that in future equivalence won't be an one-off decision, with third countries closely monitored to ensure no divergence in rules or standards of supervision.
The EU is already toughening equivalence conditions for foreign clearing houses, aimed specifically at the London Stock Exchange's LCH unit in London, which clears the bulk of euro denominated interest rate swaps. - Reuters
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