Truss vows to 'supercharge' the City of London financial services sector if she becomes PM

Thu 1 Sept 2022
Posted by: Phillip Adnett
Trade News

PMI data month of August

Liz Truss has pledged to maintain the City of London’s competitive edge and “supercharge growth and investment” if she becomes prime minister.

Speaking to City AM, Truss called the City the “jewel in the crown of the UK economy but for too long its potential has been held back by onerous EU regulation”.

Revitalising the City

She has promised reforms of Solvency II and MiFID regulation, which some insurance companies say are needed to free up cash to invest in large-scale UK projects.

Solvency II contains rules for insurance firms, whilst MiFID regulates financial markets and protects investors. Both were retained by the UK post-Brexit.

“By unleashing investment and revitalising the City’s research expertise, we will be able to offer the tools businesses need to invest in the dynamic companies that will get our economy moving,” Truss said.

Barney Reynolds, global head of the financial services industry group at law firm Shearman & Sterling, told Bloomberg that Truss’ proposal to regulatory reform “will require immense effort and a lot of care and thought, but it will lead to more growth.”

Overhaul rules

The chairman of the London Stock Exchange has warned London will lose its current status as a global financial hub without a “once-in-a-generation” overhaul of City rules, reports the Telegraph.

In a submission to the Financial Conduct Authority (FCA)’s primary markets review, Michael Findlay said officials must water down stock market rules if the City is to remain a relevant destination for flotations and capital raisings.

Digital trade barriers

Another warning from the City of London Corporation says post-Brexit trade deals have left “significant barriers” in place that are hampering digital trade, reports City AM.

The success of UK trade deals – such as those with Australia, Japan and New Zealand – has been hampered by a lack of engagement from officials, as well as “a litany of carve-outs and exceptions”, the new report claims.

Ease trade flow

The new prime minister is being urged to ease the flow of digital trade by including regulators in “defining negotiation terms and objectives” for future deals.

Financial lobby group City UK warned that countries were at risk of being broken into national “splinternets” unless governments agree on a shared approach to data regulation.

New pilot

Meanwhile, Lloyds Bank and Swedish fintech Enigio have completed the UK’s first digital promissory note transaction in a pilot hailed as “significant” for wider use of the digital device.A promissory note is a written promise by one party to pay another at a later date, and is often used in trade finance.

GTR reports the pilot enabled the transaction to be completed within 24 hours, whereas a paper promissory note can take over a week.

Digital versions of promissory notes and bills of exchange are not yet valid under English law, although the UK government recently announced plans to introduce legislation for electronic trade documents to have the same legal standing as paper versions.