Partner Barnabas Reynolds, head of Shearman & Sterling’s global Financial Institutions Advisory & Financial Regulatory practice, was interviewed by Sky News on alternative legal models for leaving the European Union that will enable the UK’s financial services and global markets to maintain their pre-eminence.

 

Reynolds addresses the issues with adopting the EU's passporting system and offers two alternative models under which the financial services sector can succeed:

• An “Expanded Equivalence” model, which would extend the equivalence arrangements now in place for third countries (e.g., the US or Australia) to access the single market and would include a bilateral procedural deal giving certainty to equivalence determinations for both the UK and EU. This would allow the UK some flexibility around the removal and reworking of EU laws and prevent the UK from being subject to EU law-making, ESA oversight and ECJ decisions.
• A “Financial Centre” model, which would allow the UK to establish a market-friendly regulatory framework, in accordance with global standards and the best global and UK practices. The UK has led the way in shaping global financial regulation and should continue to do so. This model would allow the country to re-evaluate its regulatory structure and move away from the unnecessary processes introduced in EU laws, allowing it to focus on outcomes.

Reynolds authored A Blueprint for Brexit: The Future of Global Financial Services and Markets in the UK, published by POLITEIA on November 2, 2016, which sets out the above in more detail.