The City seems to run out of options. While Brexit seems most likely to deprive the City of its passporting rights ensuring it the access to European market, the other option, the so-called equivalenсe, looks fickle as well.

According to a report by The Financial Times, the European Commission is considering all possibilities that would make winning equivalence for EU jurisdiction harder, approval for their legislature system to be deemed as tough as the EU’s one, providing free access for financial firms.

Substituting full single market access with equivalence has always been problematic, even before the EU decided to toughen it, due to it lacking certainty.

For the beginning, it is not completely clear whether the UK would win equivalence. While Britain abides by the EU financial rules, the ones are known for being used politically rather than technically, which does not play well for a country in trade negotiations with the EU.

For the beginning, it is not completely clear whether the UK would win equivalence. While Britain abides by the EU financial rules, the ones are known for being used politically rather than technically, which does not play well for a country in trade negotiations with the EU.

The EU possess the authority to pull equivalence from a jurisdiction at any time, giving the London-based banks as well as investment companies a hard time planning ahead for periods exceeding 2 years.

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Despite these problems, Britain had high hopes that equivalence would have some impact on keeping the keeping the European door open for for UK financial industry.

The previous month the UK trade minister Mark Garnier disclosed the UK’s plan to negotiate “new model” of financial trade with the EU that would involve some type of equivalence and serve as an even better option than passporting rights.

“If we can create a special hybrid version of that, with a better version of equivalence or a different version of passporting, then that’s what we will try to achieve. What we are not trying to do is fit into an existing box. We are trying to create a new model,” Garnier said.

The Prime Minister’s government has confirmed their striving for ‘hard Brexit’ prioritising immigration controls over economic links such as the EU’s financial passport, that enable companies to use London as a base to conduct their operations across the Europe.

Being deprived of single market membership might be devastating to the City of London. The FCA reports that JPMorgan and UBS have both bravely announced they might have to shift thousands of jobs out of Britain in case they lose passporting rights, while Goldman Sachs is reported to be considering moving up to 2,000 headcount.

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