Past Event

Substance requirements for financial firms moving out from the UK

In the run-up to Brexit, UK-based financial firms are considering how to organize their operations across the future divide between the UK and EU27. This event will discuss the regulatory requirements on how self-sustaining the operations in the EU should be, and implications for the single market and third countries.

Date: June 2, 2017, 12:30 pm Topic: Finance & Financial Regulation

VIDEO AND AUDIO RECORDING

 

SUMMARY

The opening remarks of the two speakers showed agreement on the broad areas in which substance requirements focus, namely:

  • Local risk management
  • Local staff
  • Local operational management
  • Local resources and booking

Overall, whereas there was also the common view that agreeing the criteria defining substantial subsidiary presence in the host jurisdiction will be challenging, the two speakers offered somewhat different perspectives on the issue.

First, Gerry Cross stressed that, despite the difficulties, requirements will be pinned out through a holistic approach and an iterative process, tackling issues on a case-by-case basis rather than conceptually. Essentially, he called for a balanced approach between rigor and feasibility that already is bearing fruits and will achieve further progress in the future. Mr. Cross also underlined that, aligning the legal entity in the host country with the true underlying activity is not a trivial issue for regulators but a key ingredient in ensuring financial stability.

Simon Gleeson likened the task of defining substance requirements to aiming at a fast-moving target, given the continuous change in the financial industry. He remarked that the topic is often discussed with the wrong premise: it makes little sense to speak of one entity and one location in the financial industry model. Put another way, there is no “it” and “there” for instance when talking about risk management and internal models. Therefore, defining local is complex and regulators will have to answer questions about what they hope to achieve in setting a specific requirement.

The questions and answers section was dominated by a discussion of the impact the Brexit negotiations will have in setting the requirements and the spillover into the future regulatory environment, financial integration and stability. Some more specific, technical questions were also posed.

To start with, the stance of regulators was contrasted to the dynamics the negotiations can create. The speakers were in agreement that any significant shocks to the financial architecture currently in place (e.g. access of UK-based firms to financial infrastructure in the EU) will not be of technical nature but the outcome of political decisions. As Gerry Cross put it, regulators’ objective is financial stability and that takes cooperation between the authorities of different jurisdictions, but in this negotiation that translates into hoping for the best and preparing for the worst.

The good scenario was also discussed. Simon Gleeson took the view that this would correspond to the broad continuation of the current situation. The rationale is that London is to remain Europe’s major financial center for the foreseeable future and EU27 will be interested in having a say about how it is regulated. In exchange, it makes sense to offer some equivalent form of market access.

Finally there was the related question of whether common interest among supervisory authorities can yield the much needed cooperation, even in the event of a hard Brexit. Nicholas Veron offered examples where regulators from different jurisdictions dealt with globally systemic threats during the financial crisis despite the absence of explicit, formal agreements. But Mr. Gleeson listed counterexamples, which he attributed to the specific, legislated and binding remit supervisors have to respect that is none other than to ensure financial stability in their own jurisdiction.

Event noted by Konstantinos Efstathiou , Research Assistant

EVENT MATERIALS

Presentation by Simon Gleeson

Schedule

Jun 02, 2017

12:30-13:00

Check in and lunch

13:00-13:45

Discussion

Chair: Nicolas Véron, Senior Fellow

Gerry Cross, Director for Policy and Risk, Central Bank of Ireland

Simon Gleeson, Partner, Clifford Chance LLP

13:45-14:30

Discussion with the audience

Chair: Nicolas Véron, Senior Fellow

14:30

End

Speakers

Gerry Cross

Director for Policy and Risk, Central Bank of Ireland

Simon Gleeson

Partner, Clifford Chance LLP

Nicolas Véron

Senior Fellow

Location & Contact

Bruegel, Rue de la Charité 33, 1210 Brussels

Matilda Sevon

[email protected]

Read about event More on this topic
 

Past Event

Past Event

Investment firepower for the recovery: a conversation with Philippe Donnet, CEO of Assicurazioni Generali

At this event the CEO of Assicurazioni Generali, Philippe Donnet will be in conversation with Guntram Wolff, Director of Bruegel.

Speakers: Philippe Donnet and Guntram B. Wolff Topic: European Macroeconomics & Governance Date: July 8, 2021
Read about event More on this topic
 

Past Event

Past Event

Strengthening the weak links: future of supply chains

What new supply chains trends will we see in the post-pandemic era?

Speakers: Ebru Özdemir, André Sapir and Guntram B. Wolff Topic: Global Economics & Governance Date: July 7, 2021
Read article More on this topic More by this author
 

Blog Post

Banks post-Brexit: regulatory divergence or parallel tracks?

Post-Brexit UK bank regulation is not likely to compromise on international standards, but will place greater emphasis on competition, making close UK-EU dialogue essential.

By: Alexander Lehmann Topic: Finance & Financial Regulation Date: July 6, 2021
Read about event
 

Past Event

Past Event

Ensuring competitiveness of low-carbon investments

At this event, speakers will introduce the core idea of commercialisation contracts, and then discuss key design elements. This includes whether contracts should be issued at the EU or national level, how competition for contracts should be organised, and which industries should be eligible for support.

Speakers: Natalia Fabra, Peter Handley, Ben McWilliams and Georg Zachmann Topic: Energy & Climate, European Macroeconomics & Governance Date: July 1, 2021
Read about event More on this topic
 

Past Event

Past Event

EU debt vs national debts: friends or foes?

The EU will become into a major issuer of safe assets in the coming years. How will this interact with the debt issuance of European sovereign debts?

Speakers: Grégory Claeys, Yves Jacob, Gert-Jan Koopman, Pablo de Ramón-Laca and Imène Rahmouni-Rousseau Topic: European Macroeconomics & Governance Date: June 29, 2021
Read article Download PDF More by this author
 

External Publication

European Parliament

UK banks in international markets

Implications of UK-euro area divergence in regulation and supervisory practice

By: Alexander Lehmann Topic: European Parliament, Finance & Financial Regulation, Testimonies Date: June 25, 2021
Read about event More on this topic
 

Past Event

Past Event

How to spend it? A closer look at the recovery plans

In this event, participants will take a closer look at the recovery plans submitted by EU countries.

Speakers: Zsolt Darvas, Alex Patelis and Maarten Verwey Topic: European Macroeconomics & Governance Date: June 23, 2021
Read about event More on this topic
 

Past Event

Past Event

Conference on the Future of Europe: Vehicle for reform versus forum for reflection?

At this policy dialogue organised by the research project EU3D, panellists will discuss different options and what they may entail while revisiting the debates on the future of Europe at national and EU-level that have been conducted thus far and their patterns, including preliminary findings on national parliamentary debates.

Speakers: Sergio Fabbrini, John Erik Fossum, Magdalena Góra, Vivien Schmidt, Manfred Weber and Guntram B. Wolff Topic: European Macroeconomics & Governance Date: June 16, 2021
Read about event More on this topic
 

Past Event

Past Event

The Recovery and Resilience Fund: Accelerating the digitalisation of the EU?

How can new EU funds financed by EU borrowing supplement national digital and green funding and EU funds available from the standard seven-year EU budget to accelerate digitalisation?

Speakers: Sam Blackie, Zsolt Darvas, Maria Teresa Fabregas Fernandez, J. Scott Marcus and Ben Wreschner Topic: European Macroeconomics & Governance Date: June 8, 2021
Read about event More on this topic
 

Past Event

Past Event

Women, Covid-19 & The EU Recovery Plan

How can we ensure that the recovery plan doesn’t leave women behind when 84% of working women in the EU aged 15-64 are employed by services that were predominantly impacted by Covid-19 restrictions?

Speakers: Mary Collins, Maria Demertzis, Alexandra Geese, Jacob Funk Kirkegaard, Dan Mobley, Naomi O'Leary and Emma Rainey Topic: European Macroeconomics & Governance Date: June 2, 2021
Read about event More on this topic
 

Past Event

Past Event

Paris Reinforce: From Numbers to Insights: How to think about economic-climate modelling

Join us for the presentation of ‘From Numbers to Insights: How to think about economic-climate modelling’.

Speakers: Haris Doukas, Ajay Gambhir, Glen Peters, Georg Zachmann and Ewelina Daniel Topic: Energy & Climate Date: May 26, 2021
Read about event More on this topic
 

Past Event

Past Event

The work of the future: How are new jobs created and what are the implications for labour markets?

Join us for a presentation of 'New Frontiers: The Origins and Content of New Work, 1940 — 2018' by David Autor (MIT and NBER) and the findings on the source of 'new work' followed by a discussion with an invited panel of academics and policy makers.

Speakers: David Autor, Maarten Goos, Barbara Kauffmann and Georgios Petropoulos Topic: Innovation & Competition Policy Date: May 25, 2021
Load more posts