Norton Rose Fulbright Global Head of Financial Services said: “Theresa May has today confirmed that the UK will leave the EU single market. For UK financial services looking to access the EU single market, this means the regulatory passport won’t be an option. In view of this, a “building blocks” model of equivalence offers one alternative for the UK and focuses on a pragmatic and dynamic solution that offers benefits to both the UK and EU. European equivalence can be augmented through sector-specific procedural tools and interim solutions. The Prime Minister has also said that there will be a phased process of implementation to prepare for new arrangements” which could provide greater certainty for the City.”

Norton Rose Fulbright partner Peter Snowdon added: “Despite the unprecedented regulatory changes that the UK financial services sector faces, there is also an opportunity for Britain through a “triangulation framework”. The triangulation framework positions the UK as a global hub for three types of financial services firms; those who wish to access the European markets, those who wish to access the US and the rest of the world and those who only wish to carry on UK domestic business. It assumes the benefits of the UK’s status as an equivalent third country with the EU but also notes that the UK is geographically well placed between Europe and the US to establish a separate regulatory hub for US marketplace activity. Finally, the UK could also develop its own domestic regulatory regime for those firms wanting to maintain a wholly domestic business in the UK.”

Jonathan Herbst and Peter Snowdon have previously discussed opportunities for the UK in a post Brexit world, passporting, equivalence and “triangulation” here. To view the video, visit: https://nortonrosefulbright.kulu.net/view/bDrQQnmVNjv

*Norton Rose Fulbright LLP was commissioned by the Financial Services Negotiation Forum to produce a briefing paper on regulatory equivalence following the UK’s decision to leave the European Union. This paper (‘Examining Regulatory Equivalence’) was published on 12 January 2017 and can be found here.