Britain and the European Union need to make progress on EU financial market access given that the coronavirus crisis will make it even harder to cope with potential disruption if there is no agreement, banking lobby AFME said on Monday.
Britain left the EU in January but has full access to the bloc under a transition period that runs until the end of December.
London and Brussels blamed each other last week for missing a June 30 deadline for assessments on financial market access from January.
Future direct EU access will depend on whether Brussels deems UK regulation to be “equivalent” to standards in the bloc.
Although it is far more limited than current access, without equivalence EU investors would not be able to use financial services in London.
“COVID-19 has the potential to disrupt Brexit planning including impacting client readiness, as well as potentially affecting the ability of firms to relocate staff to other jurisdictions,” AFME said in a statement.
AFME said ensuring that EU investors can continue using clearing houses in London needed addressing before the end of September to avoid customers having to move derivatives positions elsewhere.
Two-way access in stock and derivatives trading was also needed to avoid disruption, AFME said.
AFME called for a formal framework for UK and EU regulators to iron out differences that could jeopardise access.
“This is particularly important in the context of the fast-evolving legislative agenda in the EU and the UK with a number of significant financial services files being proposed, due to be implemented, or under review in the second half of this year and the first half of 2021,” AFME said.
The EU’s chief Brexit negotiator Michel Barnier said last week that financial firms must get ready for big changes in January.
“We will only grant equivalences in those areas where it is clearly in the interest of the EU, of our financial stability, our investors and our consumers,” Barnier said.