UK tries to help London regain its role as a world financial center

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London wants to regain the rank of the busiest financial center in the world of New York, reviewing how banks and other financial firms are regulated after the Brexit – the departure of the United Kingdom from the European Union.

The British government said this month that its main financial regulators will be required to help drive growth and international competitiveness in the financial sector, as secondary mandates to existing tasks such as maintaining financial stability and protecting the consumer.

Changes in practice would give regulatory agencies a freer hand to rewrite rules on topics such as initial public offerings (IPOs), green finance and cryptocurrencies.

Measures are a response to divorce with the EU, which took effect earlier this year. In the past, the UK had to follow European rules, which were enshrined in British law. The proposals “will facilitate the repeal of most EU financial services laws withheld,” said the Treasury of the United Kingdom.

Changes being driven by the industry include revamping EU inherited rules in areas such as clearing and bonuses banking, private equity firms, hedge funds and insurance, according to Barnabas Reynolds, a London-based partner at the law firm Shearman & Sterling LLP.

Looser financial regulation, which laid the groundwork for the 2008 global financial crisis, led to a regulatory review in the UK. Some fear that these changes, designed to protect investors and markets, could be undone with greater emphasis on competitiveness.

“Will we see weakened rules to attract business?” asked Rachel Haworth, policy manager at ShareAction, a UK non-profit organization that organizes investor campaigns on social and environmental issues. “That would be cause for concern and potentially harm the integrity of the UK market that makes it attractive.”

London’s role as a financial center in Europe was thrown into uncertainty by the UK vote in 2016 to leave the trading bloc. For a generation, London has served as the official hub of banking and finance activities across the EU, helping companies and countries raise debt, issue equity and invest.

Brexit hampered London’s ability to serve EU companies by requiring that some European deals, such as stock trading and sales of some financial products, take place within the bloc’s borders.

Some see the exit, however, as a chance for the UK to redefine its financial rules to become more competitive, similar to the changes of the 1980s under Prime Minister Margaret Thatcher, known as the “Big Bang”.

London was ahead of Nova York from 2015 to 2018 on a financial capital rating compiled by the Z / Yen Group, based on availability of capital and skilled workers, the rule of law, infrastructure and other factors.

Brexit, the European financial crisis and the end of the boom in commodities in the early part of the past decade they eroded London’s fortunes, drying up the IPOs and merger and acquisition activity that fuel financial transactions.

The UK was also recently ranked second, after the USA, on a list of financial centers by the London-based research group New Financial.

TheCityUK, a lobbying group of banks and finance companies, wants the UK to be number one among global financial centers in five years.

Reference: CNN Brasil

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