Financial firms to seek an operational license in the UK after Brexit

on Jan 21, 2020
Updated: Mar 11, 2020
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  • Financial firms to seek temporary permission to operate in the UK after Brexit.
  • Firms currently set up in the UK will also be expanding to the EU after Brexit.
  • UK marks a premier client for the European Union's financial firms.
  • Britain's finance minister, Sajid Javid, says access to the EU will be under equivalence system after Brexit.

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According to Bovill regulatory consultancy, over a thousand European Union financial firms like asset managers, banks, and insurance companies plan on setting their offices in the United Kingdom after it leaves the EU on January 31st. The move is directed at keeping their services available to the clients in the UK.

Once the Brexit transition period ends in December, the two-way unfettered direct access between the United Kingdom and the European Union will no longer be operational. The new setups, therefore, are expected to help dilute the loss of business.

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UK Marks A Premier Client For EU’s Financial Firms

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The Bovill report further highlighted that following the UK’s departure from the EU on January 31st, these companies that have previously been serving the UK clients from their setups in other countries of the European Union will now seek temporary permission to open offices in Britain.

According to Michael Johnson of Bovill Consultancy, UK marks a premier client for a wide range of Europe’s financial services companies.

On the other hand, the financial services firms in the UK will also be looking forward to operational licenses in the EU. New Financial think tank highlighted in its recent survey that more than 300 financial companies have already opened EU hubs in order to continue their business with the bloc after Brexit. As per Consultants EY’s estimate, as many as 7,000 positions in London will need to be relocated to Europe while around 2,400 new positions will also be opened in the continent.

Considering the current circumstances, financial firms are eagerly watching the ongoing negotiations between the two parties concerning a broader trade deal that PM Johnson aims at closing by the deadline of December 2020.

Access To The EU Will Be Under Equivalence System After Brexit

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As of Saturday, Sajid Javid, Britain’s current finance minister, commented in his talk with the Financial Times that after Brexit, the access to the European Union is likely to be under the equivalence system; a fundamental yet patchy access that is widely used by the United States, Japan, and Singapore.

The Bovill report also highlighted that 228 firms from Ireland, 170 from France, 165 from Cyprus, and 149 from Germany have submitted their application for temporary permission to operate in the UK.

EY, on the other hand, accentuated that the banks are now faced with a crucial decision of evaluating if setting up multiple hubs in the UK and the Eurozone is economically strategic or would it rather help to let go of a few of the hubs.

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