French financial watchdog warns of UK post-Brexit ‘conflict of interest’
UK members of the regulator of Europe’s financial system could have a potential “conflict of interest” because of their wish to preserve the status of the City of London as the region’s leading financial centre after Brexit, according to one of its senior board members.
Gérard Rameix, who sits on the board of the European Securities and Markets Authority (ESMA), which brings together regulatory chiefs from across the EU, said its UK representatives have had a different set of priorities since the UK voted to leave the EU, according to a report published in The Financial Times.
“I think the [UK] Financial Conduct Authority people are perfectly conscious of [the potential problem] and I think they are going to collaborate with us,” said Rameix, who is a prominent ESMA member and chairman of France’s AMF markets watchdog. “But it is possible that on certain issues there will be a conflict of interest.”
Area of conflict
Rameix said one possible area of conflict was over the rules governing so-called third-party status with the EU because the UK will itself become a third-party country to the EU after it leaves the union following the Brexit decision. Another potential issue concerns the rules governing clearing houses, as the City is keen to keep its institutions as leading players in clearing euro-denominated transactions, even after Brexit.
Asked if the UK had an incentive to push for tougher regulation in Europe to give London a relative advantage after leaving the EU, he said: “Yes.” But he added that, so far, the British regulator had been “very constructive”, according to the Financial Times report.
Rameix added said another serious post-Brexit concern was a possible drop-off in information sharing between the UK and the rest of the continent. At present the AMF is given access to trading data in London, which it uses to spot suspicious market activity concerning French companies.
“Now with the Brexit vote we face a great difficulty,” Rameix said, adding that “specific agreements” with London over information sharing would be required after a UK exit.