Britain has put up more than 30 measures to support the City of London's position as a major financial hub around the world.

On Friday, Britain put up more than 30 measures to support the City of London's position as a major financial hub around the world. The City of London is now outside the European Union and is up against competition from New York, Singapore, Amsterdam, Paris, and Frankfurt.

A review of the regulations put in place after the financial crisis more than ten years ago to hold bankers accountable for their choices and to ease capital requirements for smaller institutions, both of which came about as a result of intense lobbying by banks, are also included in the planned adjustments.

According to Finance Minister Jeremy Hunt, it would be incorrect to characterise the 30 measures as a "Big Bang," alluding to the deregulation of the stock market in the 1980s, which will undo stricter regulations put in place following the global financial crisis.

At an event sponsored by the FT, he said, "We have to be careful not to forget the lessons of 2008, but at the same time acknowledge that banks today have substantially better balance sheets."

Brexit has effectively cut off the City from the EU, placing pressure on the government to relax regulations as Amsterdam surpassed London to become the largest share trading hub in Europe, adding to competition from New York and Singapore.

Britain can create its own laws after leaving the EU, but because it is home to numerous international banks, it has little leeway to significantly deviate from accepted practices.

According to a statement from the finance ministry, "the government's approach to changing the financial services regulatory landscape recognises and safeguards the pillars on which the UK's success as a financial services hub is built: agility, consistently high regulatory standards, and transparency."

In an Edinburgh meeting with representatives from the financial industry, Hunt outlined his proposals.

The proposed reset, now known as the "Edinburgh Reforms," had been branded "Big Bang 2.0," creating expectations of a significant deregulatory push that made banks fearful of expensive system upgrades.

But rather than completely removing regulations, the focus now is on reviewing and improving policies while still adhering to international norms.

A review of the regulations governing securitization and short-selling, a revision of the prospectuses that firms submit when they list, and a plan to abolish and amend regulations that were put in place while Britain was a member of the EU are all included in the list of planned reforms.

A consultation on a central bank digital currency, a topic that Prime Minister Rishi Sunak was enthusiastic about as finance minister, is also on the agenda for the upcoming weeks.

A consultation on regulating rating compilers for a company's environmental, social, and governance (ESG) implications will also take place.

The EU is ahead in sectors like cryptoassets and is upgrading its own banking regulations to lessen any remaining reliance on London.

Responsibility

The revisions focus on two sets of regulations that Britain implemented following the financial crisis more than ten years ago when the government had to bail out undercapitalised banks while punishing a few specific bankers.

The first set, known as the senior managers and certification regime (SMCR), calls for banks and insurers to identify the people in charge of particular tasks so that regulators may more easily penalise them when things go wrong.

Bankers have complained that the authorities review of these high-level appointments takes too long.

In accordance with the second set of regulations, banks must "ring-fence" their retail divisions with a capital reserve to protect deposits from a blow-up in riskier businesses like trading derivatives.

To release banks that focus on serving the retail market and to reduce "unnecessary regulatory burdens on enterprises while ensuring protections for depositors," the ring-fencing regime will be changed.

Banks have pushed for either the rule's repeal or a considerable increase in the deposit level that initiates the requirement. Smaller banks would likely benefit from the revisions, which will support Britain's ongoing efforts to boost competition in a market dominated by HSBC, Barclays, Lloyds, and NatWest.

In 2020, Sam Woods, the deputy governor of the Bank of England, vowed to defend the ring-fencing regulations "until the last drop of blood." On Friday, the BoE declared that it would cooperate with the ministry to maintain a stable and competitive financial system.

With the passage of its financial services and markets bill by parliament, Britain has already proposed some early adjustments. It includes establishing for regulators the additional goal of taking into consideration the City's worldwide competitiveness when formulating policies.

(Sources: investing.com, reuters.com)