What is the link between trade talks and financial equivalence?

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Financial Market Access Tied to Trade Deal Outcomes

Access for Britain-based financial firms to the European Union market will be determined by the overall results of ongoing trade negotiations. As the Brexit transitional period concludes, both Britain and the EU will lose their previous privileged access to each other's financial markets. However, opportunities for cross-border operations may persist in certain sectors if regulatory rules are deemed equivalent.
Equivalence as a Component of the Broader Relationship

The European Union will evaluate whether its economic partnership with Britain will include provisions for regulatory equivalence. These equivalence decisions are considered integral to the comprehensive future relationship between the two entities and must be assessed within that broader context. While not explicitly part of the EU's draft negotiating mandate for a trade deal, the assessment of sectors eligible for equivalence is set to commence immediately.
Unilateral Decision-Making on Equivalence

Decisions regarding financial market equivalence will be made unilaterally by the European Union. The EU currently utilises equivalence regimes across approximately 40 financial sectors. It is important to note that under these regimes, only foreign investment banks, clearing houses, and stock exchanges are eligible for full access to the EU market, with other types of firms facing varying degrees of restriction; retail banking, for instance, is not covered by equivalence.
Mutual Assessment of Financial Market Access

In parallel, Britain will also undertake its own assessment to determine whether to grant EU financial firms access to UK customers. This will occur under the equivalence system that Britain has incorporated into its domestic law. The framework of equivalence allows both the EU and Britain the freedom to implement distinct prudential regulations aimed at safeguarding financial stability within their respective markets.

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What is the link between trade talks and financial equivalence?

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