Thread by @tconnellyRTE

The European Commissioner for Financial Services @McGuinnessEU has said the EU will not grant equivalence to the UK based on the regulatory situation governing the City of London today, but on what occurs in the future.

2/ Responding to Rishi Sunak’s Mansion House speech on his post-Brexit vision for the sector, Ms McGuinness said: “I took note of the Chancellor’s statement. I think in the long run we are expecting the UK to diverge [from EU financial services regulation]...

3/ "That’s been their mantra because of Brexit."

4/ “So therefore we have to be careful not to grant equivalences based on what exists today, but to look at what the future might hold, and always looking at what is in the interests of the European Union and our financial stability.”

5/ Ms McGuinness was speaking to @rtenews at the launch of the Slovenian presidency of the EU in Brdo, outside Ljubljana.

6/ Financial services were not covered by the EU UK free trade agreement, the Trade and Cooperation Agreement (TCA), concluded in December.

7/ Instead, the EU is expected to issue a number of “equivalence” decisions, granting the UK qualified access to EU markets for financial services.

8/ In his first Mansion House speech, Sunak said Brexit was a unique opportunity to tailor rules while maintaining high regulatory standards and open markets.

9/ Brexit has largely severed the City's ties with investors in the EU, triggering a shift in over 7,500 financial jobs from London to new hubs in the bloc.

10/ The EU has yet to decide how much direct access it will grant the City in future, while trying to engineer a shift in clearing in euro derivatives from London to Frankfurt.

11/ Sunak said the EU would never have cause to deny Britain access because of poor regulatory standards.

"So I see no reason of substance why the UK cannot or should not continue to provide clearing services for countries in the EU and around the world," he said.

12/ Ms McGuinness said: “The equivalence decision isn’t imminent, and nor is it a process. Financial services weren’t included in the TCA, what we’re doing now is looking at what we need in terms of long term stability in the financial system.”

13/ The European Commission has provided interim access, allowing the City of London to provide euro clearance services for derivatives until June 2022.

14/ Ms McGuinness said: “In the interim we’re working with experts to see, is that a vulnerability for the European financial system, and what is it we need to do to guard against that vulnerability in the system?”

15/ She told RTE News: “We’re not looking at equivalence yet. We will be setting up a forum where we will discuss these issues. But the difference between the discussion on a trade agreement and the discussions on the financial system, is they will be done on a case by case basis

16/ “There’s no sense of urgency. On January 1, when this new regime kicked in, there was no instability, and there’s no instability on July 1. That’s what we want to maintain - stability.

Additional reporting by @Reuters