Passporting could survive Brexit process - report

Financial services passports to Europe should continue in thewake of the UK government’s Brexit whitepaper, according to a report from a UK recruitment firm.

The UK government presented Members of Parliament with its formal policy paper for how the UK intends to leave the EU, following parliament's vote to give Theresa May the power to trigger article 50.

“The whitepaper explicitly outlines the government willbe aiming for the freest possible trade in financial services between the UKand EU and defends the use of financial services passports,” said Lloyd Wahed,managing director at Athelstan Search, the UK-based data and analytics recruitment firm.

The paper stresses there are provisions in place thatwill allow firms from “third countries” to provide services across the EU “providedthat their relevant domestic regulations have been deemed equivalent to thoseof the EU".

These passports, which are used by 5,500 firms in the UK,are “essential for deregulated access to the single market,” said Wahed.

“Moreover, there may be openings for the tech industry inthe single market, as the Whitepaper states there may be special arrangementsin specific areas.”

The whitepaper also stressed that in sectors such as thefinancial services “there will be a legitimate interest in mutual cooperationarrangements that recognise the interconnectedness of markets, as so clearlydemonstrated by the financial crisis".

The government pledges its commitment to continue to “supportand implement international standards to continue to safely serve the UK,European and global economy".

Wahed also identified the technology sector as one that maybe benefit from Brexit’s impact: “Moreover, there may be openings for the techindustry in the single market, as the whitepaper states there may be specificarrangements in specific areas.”

Despite these optimisms, Wahed stressed how parliament isstill debating amendments and Theresa May is still negotiating with the EU. “Thiswhite paper is still no definitive agreement and specificities are still absent.”

“Therefore, the white paper is merely hollow reassurance,and the tech industry will have to wait a little longer.”

Wahed’s views come shortly after a market expert predictedfurther delays in the investment fund industry to the extension of the AIFMD passport to non-European funds due to Brexit, as reported by FOW on January 16.

"We expect continued delays to the extension of theAIFMD marketing passport to non-EEA funds and managers, in large part due toBrexit... The European Securities and Markets Authority has now maderecommendations that equivalence be given to a handful of third countries underreview. However, the decision lies with the European Commission and no word hascome from them yet on the topic. Brexit will most likely lead to furtherdelay," said Bill Prew, chief executive officer of independent depositary IndosFinancial.