Different member states at various points have had to give up supervisory control, they've had to pool risk-sharing, they've had to accept further EU competencies. That is always a delicate compromise. And it's one political reason why mutual recognition will be so difficult. 1/
Given the direction of the EU, it is likely that more powers will be sought at the EU level - the European Supervisory Authorities may well be given more responsibilities in lieu of national regulators. 2/
Getting member states to compromise and give up some control is going to be harder if you have a third country who gains similar benefits without relinquishing any competencies. So the politics is difficult. 3/
But there are still practical or economic incentives for the EU to offer the UK more than is currently available. From the article above this looks like it could be enhanced equivalence rather than mutual recognition. 4/
That means it won't be something the UK and the EU mutually agree in a treaty but a unilateral updating of current EU equivalence provisions. It will be an EU decision subject to political influence. As the draft says it'll "preserve the autonomy of decision making in EU" 5/
There is still a question about how far the EU would want to set a precedent for other countries if it pursued enhanced equivalence. But it could probably just make the conditions such that only a former member state would qualify. 6/
For the UK if the conditions are prescriptively rule-based then the UK is going to need to be more of a "rule-taker." It would much prefer where possible to have a more outcomes based approach that focused on practical supervision rather than granular rules. 7/
There are limited equivalence provisions more like this that the US enjoys - MIFID II for instance. But with political winds seeming to point towards bringing more financial services in the tent of the EU (e.g. relocation of clearing) it may not get very far. ends/
