​MNI BRIEF: Hard To Grant UK 'Equivalence' - EU Official

It would be very hard for the European Union to grant the UK's financial services sector equivalence as its plans for regulatory divergence post-Brexit were opaque, Mairead McGuinness, nominee for the position of European Commissioner for Financial Stability, said during her European Parliament confirmation hearing Friday. She noted that the EU had, temporarily, removed a major threat to financial stability by granting equivalence for UK based central counterparties (CCPs), facilitating derivatives clearing for EU based CCPs for the next 18 months, giving it time to wait-and-see on the broader equivalence question.

When the European Commission grants equivalence, it deems an external country's regulatory framework equivalent to its own, facilitating cross-border financial services provision. Bank of England Governor Andrew Bailey has argued in favour of a joint monitoring framework that would allow the UK to diverge to some extent from EU regulation while still maintaining equivalence, but it is far from clear that the EU side will deem this workable.