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"Financial stability and market efficiency must be safeguarded
during the Brexit implementation process and thereafter," the
Association for Financial Markets in Europe (AFME) Chief
Executive Simon Lewis said in a statement.
In a report released on Wednesday, AFME highlighted conflicting
issues faced by the key actors in Brexit talks which it said
could cause disruptions, including Britain wanting to secure the
best possible access to the bloc, while not wishing to remain
part of the single market.
AFME is also concerned about the European Commission having
responsibility for EU financial markets policy, while also being
the EU's chief Brexit negotiator, as well as Europe's capitals
competing to attract financial firms from London, while also
wanting to limit any additional systemic risk.
"With such a disparate set of actors and incentives, it will be
a major challenge to implement Brexit in an orderly way in
relation to wholesale banking," AFME said.
There are also potential problems ahead for banks in London that
want to continue operating from the British capital after Brexit
under an EU system known as "equivalence", whereby the EU grants
market access to non-EU firms that comply with rules that are as
robust as those in the bloc.
AFME said the European Securities and Markets Authority (ESMA),
would play a crucial role in advising the EU on whether a non-EU
firm could be deemed to be equivalent.
ESMA's resources, however, will become more stretched once the
UK's budget contribution ends, meaning that obtaining
equivalence for about 2,000 firms may not be fast enough to
avoid market disruption, AFME added.
(Reporting by Huw Jones; editing by Alexander Smith)
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