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Hammond warns Brussels 'land grab' would mean 'poorer quality, higher priced' financial services across EU

The Telegraph logo The Telegraph 14/09/2017 By Hannah Boland
© Provided by The Telegraph

Philip Hammond last night warned the EU against a land grab for the City’s financial services sector, but offered an olive branch by saying that the bloc had some valid concerns about oversight. 

In a speech at the Mansion House, the Chancellor said there were “legitimate concerns among our EU colleagues about the oversight and supervision of financial markets … providing vital financial services to EU firms and citizens”.

However, he said the UK would not pander to “protectionist agendas, disguised as arguments about financial stability” and would instead address concerns by “forward-leaning proposals for greater transparency, cooperation, and agreed standards based on international norms”.

"We will seek to agree new mechanisms around key issues, from dispute resolution to data protection," he said. 

How the City of London will be affected by the UK's exit from the European Union has emerged as a major area of dispute in recent months, centering around passporting rights and the huge market for euro-denominated derivatives clearing.

Brussels has proposed joint supervision of clearing houses handling euro-denominated trades, with a provision, opposed by the UK, that would allow the bloc’s regulators to force a clearer to relocate to the eurozone in certain circumstances.

It is a major industry, with around $574bn (£443bn) of euro-denominated derivatives traded each day.

Meanwhile, should City-domiciled banks and financial services firms lose EU passporting rights, it could prevent them from exporting their services into the European Union. 

Mr Hammond in his speech said: "A fragmentation of European financial service markets would result in poorer quality, higher priced services for business and citizens across Europe.

"It would result in business being lost to New York and Hong Kong…it would push up fixed-rate borrowing costs for homeowners across the continent…it would push up costs for airlines hedging against fuel prices…or farmers protecting themselves from foreign exchange risk when exporting their produce."

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