Switzerland and United Kingdom seek closer cooperation on financial services
The Swiss and UK finance ministers, Federal Councillor Ueli Maurer and Chancellor of the Exchequer Rishi Sunak, today signed a joint statement on deepening cooperation between the two countries in the area of financial services during a virtual meeting. They also exchanged views on the impact of the COVID-19 pandemic on the economic situation and financial markets, as well as on national bridging aid schemes for the economy.
The joint statement signed by Federal Councillor Ueli Maurer and the Chancellor of the Exchequer, Rishi Sunak, underscores the shared ambition for an agreement between the two countries that would enable cross-border market access for a wide range of financial services relating to insurance, banking, asset management and capital market infrastructure. With such an agreement, Switzerland and the United Kingdom intend to reaffirm their commitment to the importance of open financial markets and international financial stability, as well as to consolidate their position as the world’s leading international financial centres in Europe. Furthermore, Switzerland and the United Kingdom intend to deepen their already established cooperation in international financial bodies such as the Bretton Woods institutions in the future.
The agreement pursued by Switzerland and the United Kingdom is to be based on the principle of mutual recognition of the respective financial market regulations and the supervisory framework. Thereby, both sides are committed to investor and consumer protection, financial market integrity and stability, while maintaining the highest regulatory standards. Moreover, the future agreement could serve as a possible template for international cooperation in the area of financial services. Switzerland sees this work as a continuation of the “mind the gap” strategy, with which it intends to secure and expand the existing relationship with the UK beyond its withdrawal from the EU.
The two finance ministers also exchanged views on the situation regarding stock market equivalence and the measure to protect the Swiss stock exchange infrastructure. They are holding out the prospect that reciprocal access to the Swiss and UK stock exchanges should be facilitated based on mutual recognition once both sides have implemented the necessary steps after the end of the United Kingdom’s transition period vis-à-vis the EU.
The implementation of the ambitions set out in the joint statement will be discussed in the next financial dialogue between Switzerland and the United Kingdom in autumn 2020. An interim assessment will be carried out at the end of 2020.
The meeting of the two ministers took place via videoconference in Bern and London due to the continuing pandemic protection measures. Other topics discussed included the impact of the COVID-19 pandemic on the economic situation and financial markets, as well as national bridging aid schemes for the economy.
This is the literally signed Agreement:
Joint Statement between the Federal Department of Finance and Her Majesty’s Treasury on deepening cooperation in financial services
1. The Federal Department of Finance (FDF) from the Swiss Confederation (Switzerland) and Her Majesty’s Treasury (HMT) from the United Kingdom of Great Britain and Northern Ireland (UK) have agreed a shared ambition to conclude an international agreement that will enhance the cross-border market for financial services between Switzerland and the UK.
2. As the two leading financial centres in Europe, Switzerland and the UK have a strong and established financial services relationship as a major source of capital for the European economy. This relationship is underpinned by a commitment to international standards and a shared belief in the value of open and resilient financial markets.
3. In the context of the global COVID-19 pandemic and the resulting challenges for our economies, these commitments and values are of even greater importance today.
4. Both sides are committed to protecting investors, consumers, market integrity and financial stability, as well as maintaining world-leading regulatory standards.
5. The objective is to improve the cross-border market for financial services between Switzerland and the UK, with an intended focus on the provision of services to wholesale and sophisticated clients in the fields of insurance, banking, asset management and capital markets (including market infrastructure).
6. In that spirit, this joint statement signals both sides’ intention to negotiate an ambitious future relationship that will build on the strengths of the Swiss and the UK financial centres to deliver benefits to consumers, the financial services sector and the broader global economy.
Model of cooperation
7. Switzerland and the UK will work towards mutual recognition of each other’s regulatory and supervisory regimes in the fields of insurance, banking, asset management and capital markets (including market infrastructure).
8. In line with work conducted by international bodies such as the G20 and the Financial Stability Board (FSB), both sides reiterate their commitment to an outcomes-based approach to mutual recognition and acknowledge that different approaches to financial regulation can achieve comparable overall aims with regard to market integrity, financial stability and the protection of investors and consumers.
9. On the basis of recognition, reciprocity and enhanced regulatory and supervisory cooperation, Switzerland and the UK will seek to improve access for the cross-border provision of financial services for wholesale and sophisticated clients as well as to reduce or remove ongoing frictions applying to cross- border activity between the two jurisdictions.
10. To avoid market fragmentation and build an open global financial system, both sides note their willingness to defer to each other’s national regimes and supervisory practices where they achieve comparable overall outcomes with regard to market integrity, financial stability and the protection of consumers and investors.
11. In recognition of the leading role both countries have played in shaping the global approach to financial regulation, and the importance of using international standards as the basis for greater cooperation, Switzerland and the UK will seek to deepen their cooperation in international fora. Switzerland and the UK will cooperate on both the design and implementation of robust international standards, as well as on innovation and the role of technology in financial services.
12. Both sides intend to conclude a legally binding international agreement that will:
a. Establish outcomes-based mutual recognition, providing rights for the provision of relevant financial services from one jurisdiction into the other, and reducing regulatory frictions for cross-border activity;
b. Establish structures and appropriate safeguards to underpin these rights, including provisions for regulatory and supervisory cooperation; and
c. Create a clear, transparent and managed process in the event that recognition is withdrawn in the future or re-established after a withdrawal.
13. With the envisaged agreement, both sides intend to set a precedent for international cooperation in financial services and a basis for future cooperation.
Next steps
14. Since 2016, Switzerland and the UK have held an annual Financial Dialogue to discuss areas of shared interest.
15. The next Swiss-UK Financial Dialogue will be held on 8th September, attended by representatives from the State Secretariat for International Finance (SIF), HMT, the Swiss National Bank, the Swiss Financial Market Supervisory Authority, the Bank of England and the Financial Conduct Authority.
16. Joint technical work on the future financial services relationship is underway and will now be intensified ahead of discussions at the Financial Dialogue, which will also be used to agree next steps, including a process for negotiations.
17. As well as discussing the future relationship, both sides intend to use the Financial Dialogue to discuss shared interests in a range of other areas. For example, cooperation in multilateral fora and sustainable finance, as well as innovation and the role of technology in the financial sector.
18. Both sides aim to take stock of progress in the negotiations at a meeting before the end of 2020.
19. SIF and HMT will continue to engage with financial services firms and market participants to ensure that the agreement delivers practical impact.
For the Federal Department of Finance, Swiss Confederation: For Her Majesty’s Treasury,
United Kingdom of Great Britain and Northern Ireland:
Ueli Maurer Bern,
30 June 2020
Rishi Sunak London,
30 June 2020