Financial firms in the U.K. may have to pay the European Securities and Markets Authority to regulate them should they do business in the European Union post-Brexit, according to a proposal floated by ESMA Chairman Steven Maijoor at the ICMA Annual Conference in Luxembourg on Thursday.
Maijoor said the regulator is considering charging financial firms from countries outside the E.U. to help cover the cost of assessing the risks they pose to the region’s markets. “It is a very resource-intensive activity,” he said, questioning whether it would be right to rely solely on the U.K.’s Financial Conduct Authority to judge the potential problems that British firms may create in the European financial system.
While Britain’s exit from the E.U. isn’t good for Europe, it’s “very bad” for the U.K., according to Pierre Gramegna, Luxembourg’s finance minister, who spoke before Maijoor at the conference. Brexit will be completed in 2019.
“It is not a win-win game,” Gramegna said. “It cannot be mutually beneficial.”
Luxembourg is among the European cities that may absorb financial talent from London as banks and asset managers consider leaving London due to Brexit-related challenges. Frankfurt, Paris and Dublin are also in the mix to become stronger financial hubs. For example, BlackRock, the world’s largest asset manager, is looking at moving London staff to Paris, according to Christian Noyer, the former Bank of France governor. Noyer is tasked with bringing jobs to the French capital as cities in the E.U. compete for financial jobs leaving the U.K.
As concerns rise surrounding Brexit, Gramegna sought to calm banks and fund managers at the ICMA Annual Conference. After all, financial firms outside the E.U. do have relationships with the trading bloc.
“Take Switzerland,” he said. “Does that prevent the major Swiss banks doing business in the European Union? Not at all. My comment on all of this is let’s de-dramatize.”
