UK in driving seat as EU financial firms DESPERATE for City of London access after Brexit

The capital’s watchdog revealed 1,300 Brussels businesses are clamouring to join a new regime, which would see them take up Britain’s offer to ensure they don’t “lose access” to London if Britain leaves without a deal.

Nausicaa Delfas, the Financial Conduct Authority’s international director, revealed the firms are seeking to trade within its temporary permission regime, which would allow firms and investment funds in the European Economic Area (EEA) to continue operating in London without impediment for three years.

Miles Celic, chief executive of lobby group TheCityUK, told CityAM the development proves London’s status as the financial centre of Europe "would not change”.

He said: “This is demonstrated by the keen interest that EU firms have shown in making sure they do not lose access to London in the event of a no-deal Brexit.”

London is the hub for Europe’s financial centre and European governments have raised concerns they will struggle to raise funds if they lose access.

It comes after Brussels looked to calm Brexit concerns by telling traders London will remain a key finance hub - even if Britain tumbles out of the bloc without a deal.

European Commission Vice President Vladis Dombrovskis last week made the commitment to traders across the continent, reassuring them they will be able to use crucial UK derivatives clearing services regardless of the outcome of Brexit negotiations.

But Mr Dombrovskis, who is also responsible for financial regulation, warned the relief allowing EU banks and companies to continue using UK-based clearing houses to process derivatives trades if talks with Brussels collapse, would only be short term.

He told the Financial Times this would also have to linked to a willingness from the UK to remain close to EU regulatory and supervisory standards.

The European Commission Vice President warned: “Should we need to act, we would only do so to the extent necessary to address financial stability risks arising from an exit without a deal, under strict conditionality and with limited duration.”

This shows the increasing fears from EU regulators over the consequences of a no-deal Brexit and the possible significant impacts on the operation of clearing houses, which have become central to a study financial system since the start of the recession in 2008.

The EU’s chief negotiator Michel Barnier has also revealed that he wants “special” access to the City of London after Brexit to avoid financial instability across the continent.

Banks and trading houses in the capital are said to provide financial services to clients across the EU using so-called “passporting rights”, which are likely to disappear following the UK’s exit from the bloc.