In 2023, City of London hopes for change to bolster growth

Bloomberg

After a jarring six months marked by sweeping policy promises, U-turns and four Chancellors of the Exchequer, UK financiers head into 2023 uncertain that the coming year will finally usher in substantive reforms to the City of London.
Current Chancellor Jeremy Hunt promised in this month’s Edinburgh Reforms to “turbocharge growth” for the country’s banks, insurers and asset managers. But his program replaced more ambitious plans for a Big Bang 2, a reference to Margaret Thatcher’s revolutionary 1980s financial deregulation, leaving bankers wondering how radical the government will be this time.
Some fear 2023 will be dominated by a tangle of reviews rather than action, despite the UK’s vote to leave the European Union being seven years ago. Brexit dividends may remain as unclear as they were in the aftermath of the referendum, they fear.
Those concerns are overly pessimistic and it is possible to discern an emerging plan for Britain’s financial services after years of wrangling about Brexit, according to Jonathan Hill, the former EU commissioner for financial services who completed a company listings review for the government. “After three wasted years, we have finally started to get a direction of travel,” Hill said.
By next summer, supporters say, the UK could have modern company listing rules, guidelines for the crypto sector and one of the world’s most modern trading hubs.
All could be overseen by regulators exercising a keen eye for opportunities to make the UK’s financial services more internationally competitive.
It is time to be bold, according to Rachel Kent, a senior partner at law firm Hogan Lovells and chair of the International Regulatory Strategy Group, which looks at UK regulation. “Now is our chance,” she said. “This is a golden opportunity to get our rules right in the interests of the whole of the UK.”
Even supporters agree the direction under Prime Minister Rishi Sunak isn’t revolutionary, but argue that changes coming through the Financial Services and Markets Bill and the 30-point plan announced in Edinburgh should help make London a more modern financial centre, with rules tailored for the UK economy rather than what was a 28-country bloc.
The two programs offer a mix of legal changes and reviews, with topics ranging from relaxing EU Solvency II insurance capital standards and MiFID II markets regulations, to the securitisation market and short-selling. The aim is to stimulate trading in London, and to encourage a multi-billion-pound inflow of pensions money and individuals’ savings into investments.
London recently lost its crown as Europe’s biggest stock market to Paris.