There are people in the City of London who want Britain to leave the European Union -- even as many financial firms warn a vote in favor of Brexit would roil markets, lead to job losses and send bankers packing to Frankfurt.
Their argument is Europe is a threat to the Square Mile and London could become a light-touch, finance-friendly island -- think Singapore-on-Thames -- if only it could disentangle itself from a Brussels-spun web of rules, regulations and red tape.
But that's not an argument; it's a fantasy. You don't have to look very far to find examples where U.K. financial regulators have shown themselves to be far more stringent than their Brussels counterparts -- or even the rest of the world. Why would that change after Brexit?
Take the asset-management industry. For the last 15 years, regulators in London -- not Brussels -- have led the way on limiting how fund managers can pass on the cost of trading and broker research to their clients.
In 2014, the Financial Conduct Authority moved faster and further than European counterparts and stopped firms from using trading commissions as a form of payment for meetings with company management. It also banned firms from using these commissions to pay for research that wasn't substantive.
Remember that access to company management and expert networks is seen as one of the most useful services offered by brokers -- and that trading commissions are a 3 billion-pound ($4.2 billion) market annually.
Since then, Britain has pushed what even other European capitals consider to be the most hawkish line on how -- or if at all -- commission payments can fund research. Even France, hardly known as a bastion of financial capitalism, has suggested keeping some of the existing arrangements.
We won't know which view will win out until nearer the time when the Mifid II rules are applied in 2018. Until then, Britain's will look more stringent than Europe and the U.S.
It's not just asset management. There are similar stories in banking. Under the U.K.'s senior managers' regime -- a product not of Brussels but the country's own parliament -- executives could be jailed for failing to spot serious misconduct on their watch. Bankers say there's nothing like it in the world; top jobs are said to be a struggle to fill as a result.
Being outside the EU is no guarantee regulatory pressure will abate. Look at Switzerland: it's not a member of the EU yet its banks are subject to some of the most stringent capital requirements in the world.
If Brexiteers must blame someone for tougher rules on research spending, financial executives and other U.K.-first initiatives like ring-fencing consumer deposits -- why not blame the taxpayer backlash against the financial crisis? That's what shaped the outlook of regulators like Martin Wheatley, who headed the FCA between 2011 and 2015 -- not Brussels.
It may just be that Britain has sought to forge a stricter path for a reason -- and an electorate that's just voted in favor of Brexit may be in no mind to deviate from it.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
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Lionel Laurent in London at firstname.lastname@example.org
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