Post-Brexit regulatory divergence: potential magnitude and impacts 

Objectives of the session

This session will discuss the risk of increasing regulatory divergence between the EU and UK, the potential impacts in terms of efficiency, competitiveness and financial stability and the possible solutions for alleviating the negative consequences of regulatory divergence.

Points of discussion

1. Extent of divergence: Are on-going regulatory reviews in the EU and UK likely to lead to significant divergence between EU and UK financial regulation and if so in which areas? Will the underlying principles of these regulations remain consistent? Is a further widening of regulatory divergence between the EU and UK inevitable over time? To what extent will global standards limit regulatory divergence in certain areas?
2. Potential consequences: What are the potential consequences of significant divergence for market participants active in both markets and for their customers e.g. in terms of costs, frictions, complexity etc…? Do the benefits of “regulatory autonomy” in terms of competitiveness or risk mitigation outweigh these potentially negative consequences? Does regulatory divergence have significant impacts on decisions to (re)locate business in the EU, UK or other jurisdictions and could it lead to business moving outside Europe? Are there financial stability implications from growing regulatory divergence between the EU and UK?
3. Possible ways to alleviate impacts of divergence: How can the possible negative impacts of EU-UK regulatory divergence be alleviated? Should enhancing regulatory and supervisory cooperation going forward be promoted to allow the EU and UK authorities to better anticipate and manage collectively policy changes and differences? How urgent is this and what are the feasible options to be considered?