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City, reforms financial markets.

Financial markets

 City executives have applauded government plans to reform the financial markets but warned that ministers needed to implement them quickly or risk losing out to economic centres in the EU and US. Chancellor Jeremy Hunt unveiled wide-ranging proposals and consultations yesterday to remove onerous regulatory burdens on financial institutions and boost post-Brexit competitiveness. The chancellor emphasised the «pragmatic» nature of the plans, initially billed by ministers as a ‘Big Bang 2.0’ but now known as the Edinburgh Reforms. They consist of more than 30 proposals, many of which focus on repealing retained EU law in financial services and replacing it with a new framework tailored to the UK.

Many in the City welcomed the reforms after initial fears that they would bring unfettered deregulation. «It’s not Big Bang, it’s thoughtful and effective Darwinian evolution,» said Mark Austin, partner at law firm Fresh-fields and author of a recent government report on company fundraising. « It’s not a question of deregulation for deregulation’s sake; it’s about smarter regulation that makes the UK financial services sector thrive even more effectively on the global stage». Simon Morris, a partner at law firm CMS, described the reforms as a «series of strategic adjustments.

Some respond to new challenges, such as crypto, while others exercise post-Brexit opportunities, such as simplifying aspects of securities trading». Brexit has led to the financial services sector losing some trading activities and staff to the EU, and the chancellor wants to use the reforms to free British businesses from rules set by Brussels. But the EU is also reforming many of these areas, and some executives warned that yesterday’s package was needed to keep pace. Romin Dabir, a partner at Reed Smith, said many executives felt that the senior managers’ regime, for example, went too far but that «a significant dilution of the rules is likely to lead to accusations that the government has bowed to pressure to turn the clock back to the bad old days of ‘Casino capitalism’».

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