Leaving the EU ended the City’s unfettered access to the bloc, sparking industry calls for a “Brexit dividend” of easing or scrapping some rules to keep the City ahead of new competition from Amsterdam, Frankfurt and Paris.
The government will review and repeal some EU rules as part of its 30-point “Edinburgh Reforms” in finance announced last week.
“That is a huge opportunity that should not be squandered,” Ashley Alder told parliament’s treasury select committee hearing on his appointment as FCA chair from February.
But he called for caution, given the City’s international role, and with the EU also reviewing many of the same rules.
Last week Brussels unveiled a draft law aimed at shifting euro derivatives clearing from London to the bloc.
“We need to be quite clear on some of the continuing risks around ambitions to pull more activity and people and suchlike away from the UK,” Alder said.
Britain should “demonstrably” maintain high standards given that extreme divergence could harm the City’s competitiveness, he said.
International banks do not like complications from fragmented regulation, he added in a video link from Hong Kong, where he heads the Securities and Futures Commission until the end of the year.
The FCA has already eased listing rules in a bid to catch up with New York in tech IPOs, but with no major impact so far.
Still, there have been no “Big Bang” proposals to shake up markets, with reforms so far tending to be “siloed” and not hanging together, Alder said.
A deeper look at investment culture, outside the FCA’s scope, could help make reforms work better, he said.
Alder said he worried that unless some of these more fundamental issues change, such as the existing preferences of big investors, it was unclear if reforms would make a very significant difference.
Alder joins the FCA as it completes a major internal revamp under Nikhil Rathi, a former treasury official who became chief executive in 2020, and has vowed to improve and speed up decision making to crack down on a rise in financial scams.
The FCA has also seen its first strikes by staff unhappy with changes to pay structures.
(Reporting by Huw Jones; Editing by Tomasz Janowski)
By Huw Jones
