Briefing from the City of London Corporation

Submitted by the Office of the City Remembrancer

 

  1. The Corporation’s work on financial regulation matters is informed by the International Regulatory Strategy Group (comprising senior representatives from a variety of industry sectors including investment banking, asset management, insurance, legal and accountancy services, exchanges and market infrastructure). Its role includes identifying strategic level issues where a cross-sectoral position can add value to the expression of views from particular sectors.

 

  1. The City Corporation’s major focus is on the financial and professional services sector. As this depends more on intellectual and financial capital than on tangible, fixed assets it is increasingly mobile across national frontiers. The financial sector based in the UK cannot be treated as distinct from Europe. The EU and UK’s financial markets are intrinsically linked and both benefit from their relationship with the other. They are governed by a common overarching regulatory structure, and depend on each other to remain competitive. The City is Europe’s financial centre and is an asset for the whole of the continent, not just the UK.

 

  1. London’s reputation as a major financial centre is based to a significant extent on its international nature. It is populated largely by international institutions. Many non-European financial services firms locate their European headquarters in London to access both the international market and the EU’s Single Market based on the knowledge that the same regulatory system exists across the entire of the EU and that they can access European markets freely from London. Moreover, many non-UK European banks locate in London to access the markets in which London has accrued specialities from financial and legal services to marine industry services. Many non-UK EU firms choose to list on the London Stock Exchange in order to access the capital on offer there, directly channelling capital to European businesses from London.

 

  1. It will come as little surprise therefore that there is strong evidence among City firms to remain in the EU and research published by both TheCityUK and the CBI further supports that view. In order to contribute to the ongoing national debate over the EU/UK relationship, the City of London Corporation has commissioned opinion research on the UK’s relationship with Europe. This has been carried out by Ipsos Mori and is made up of 100 interviews of senior business leaders as part of Ipsos Mori’s annual ‘Captains of Industry’ Survey. The sample is augmented with an additional 120 senior financial services professionals, providing a total sample size of 220. These interviews include ‘open questions’ that will provide an opportunity for business leaders to explain what reforms they would like to see made in Europe to improve business competitiveness. The results will be available early next year.

 

  1. It may also be worthwhile bringing to your attention that the Lord Mayor, Fiona Woolf, and the City’s Policy Chairman, Mark Boleat, have recently returned from a visit to Athens ahead of Greece assuming the EU presidency in January. At meetings with the Bank of Greece, the Ministry of Finance, the Ministry of Development and with senior industry figures operating in Athens, the Lord Mayor and Policy Chairman discussed key dossiers including Banking Union, recovery and resolution, FTT and MIFID.

 

  1. The visit came at an important time for Greece – aside from imminently taking on the Presidency, Troika negotiations are continuing and the Prime Minister, Antonis Samaras, had just returned from a visit to Berlin, the aim of which was to gain Germany’s support for Greece’s debt relief programme.  Despite financial services not being a priority area for Greece, as the Presidency approaches the Lord Mayor and Policy Chairman found that officials at the Ministry of Finance, the Bank of Greece and Capital Markets Commission were turning their thinking to key financial services dossiers that would need attention in the coming months, with an emphasis on those that would be inherited from the Lithuanian Presidency, and completing what is outstanding rather than attempting to drive forward new issues. There was still uncertainty about whether MIFID would be finalised before the end of 2013 but if negotiations continued into 2014, Greece would make it a priority to finalise this key piece of regulation.  The Lord Mayor and Chairman raised concerns regarding third country equivalence which were being considered as part of the ongoing negotiations.  Banking Union would also be a key focus, particularly for the Bank of Greece, and it was hoped that this could be advanced and finalised in the coming months – including reaching an agreement over the Single Resolution Mechanism (SRM).

 

  1. It was acknowledged that this would be a slightly unusual Presidency. European Parliamentary elections due to take place in May 2014 mean that Greece’s Presidency will effectively be shortened to just four months, meaning less time to get things done, but pressure to finalise regulation before a long period of legislative inactivity in Brussels until at least Autumn 2014.

 

December 2013