UK and China regulators discuss framework for financial projects

Mon Aug 1, 2016 5:44am EDT
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(This story filed on July 31, 2016 corrects final paragraph to take out reference to China's Ministry of Finance. A request for comment had not been made at that time)

By Michelle Price

HONG KONG (Reuters) - British and Chinese securities watchdogs are discussing an agreement that will pave the way for landmark financial services projects between the countries, sources said, easing fears that Britain could be a less attractive partner for such deals after last month's vote to leave the European Union.

Britain's Financial Conduct Authority (FCA) and the China Securities Regulatory Commission (CSRC) are cooperating on a regulatory framework for a scheme for distributing fund products in each other's jurisdiction and a proposed London-Shanghai link for trading shares, two people with direct knowledge of the matter said.

Britain, home to the EU's biggest finance sector, has been pushing in recent years to deepen its financial services ties with China, which has agreed to these and other cross-border financial services schemes as part of the UK-China Economic and Financial Dialogue (EFD) program.

The UK's former Chancellor George Osborne and Chinese vice premier Ma Kai said at last September's EFD meeting in Beijing that they would explore the creation of a London-Shanghai equity link and mutual funds recognition scheme, but neither government has provided further details.

There are, however, other complications in the economic links between the two countries since the EU vote ended the premiership of Britain's David Cameron, who along with Osborne had been keen to develop cooperation with Beijing.

New Prime Minister Theresa May stepped in on Friday to delay a planned Chinese investment in a new British nuclear plant to review security concerns, a former colleague and a source said on Saturday.

Vince Cable, who was business secretary from 2010 to 2015, also told BBC Radio that during Cameron's tenure May had made "quite clear she was unhappy about the rather gung-ho approach to Chinese investment".   Continued...

The logo of the new Financial Conduct Authority (FCA) is seen at the agency's headquarters in the Canary Wharf business district of London April 1, 2013.  REUTERS/Chris Helgren