UK Government Seeks Input on UK Framework for Cross-Border Financial Services

HM Treasury has launched a call for evidence on the U.K.'s framework for cross-border financial services. HM Treasury is considering policy approaches for ensuring the U.K. framework is fit for the future given the U.K.'s exit from the EU, including consideration of how effective and proportionate regulation can support attracting investment and liquidity to the U.K. Responses to the consultation may be submitted until March 11, 2021.

The U.K.'s framework for cross-border financial services comprises various regimes which allow non-U.K. firms to access the U.K. markets. It includes the new equivalence regime (adopted for the purpose of Brexit); the recognition regime for overseas financial market infrastructure; the overseas persons exclusion, which generally allows access of foreign firms to U.K. wholesale investors without requiring any authorization or recognition; and the overseas branching policies set by the Prudential Regulation Authority and the Financial Conduct Authority. The government's call for evidence seeks feedback on the overall regime, how the framework works in practice and how market participants approach the different regimes. HM Treasury is seeking input on overlaps between the regimes, whether regimes in other countries provide similar benefits, obstacles to using the regimes and the impact on a firm's business model. The focus is on the:

1. Overseas persons exclusion;
2. Equivalence regime for investment services under the U.K. Markets in Financial Instruments Regulation;
3. Recognition regime for overseas investment exchanges; and
4. Financial Promotion Order, particularly for the distribution of certain overseas long-term insurance products in the U.K.

These proposals should be considered alongside the Future Regulatory Review for financial services, the Payments Landscape Review and the consultation on extending the U.K.'s regulatory perimeter to include stablecoins, in which HM Treasury is considering policy approaches for ensuring the U.K. framework is fit for the future given the U.K.'s exit from the EU.

View the call for evidence on the U.K.'s framework for cross-border financial services.

View details of the Payments Landscape Review.

View details of the Future Regulatory Review.

View details of the consultation on extending the U.K. regulatory perimeter to capture stablecoins.

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