The FCA has published a speech by Andrew Bailey, FCA Chief Executive, on free trade in financial services and global regulatory standards for market access for financial institutions. In his speech, Mr Bailey calls for global regulatory standards, such as those produced by the Basel Committee on Banking Supervision, the International Organization of Securities Commissions and the International Association of Insurance Supervisors, to act as a basis for market access for financial institutions.
Mr Bailey sets out a framework for the use of global standards as a basis for market access:
- the standards should apply to internationally active firms and activities. Smaller firms that choose not to trade across borders would not be subject to the global standards;
- the standards should cover core prudential requirements, the resolution of failed firms where necessary and market practices where those present a sufficient threat to financial stability. Mr Bailey suggests that the high-level basis of existing global standards will assist in capturing the necessary essence of broad equivalence necessary for market access;
- home state authorities should be transparent about the standards they set for governance, remuneration and other areas that affect the culture within firms. These standards should be subject to peer review; and
- regulation of financial conduct would be set at the national or regional level in the countries in which firms operate. This means that all firms operating in a country would be subject to the conduct rules of that country, regardless of whether they have a presence in the host country or sell services across borders.