The uk-eu relationship in financial services

The Committee recognises the need for continued scrutiny of ongoing 
and future developments that might affect the sector. In this regard, 
we welcome the Chancellor of the Exchequer’s commitment to make 
an annual ‘State of the City’ report to Parliament, as proposed by 
Lord Hill in the UK Listings Review.
168. 
The Chancellor has committed to presenting the first of these ‘State 
of the City’ reports this year, but it is unclear when this will be; the 
Government should provide clarity on this. We recommend that 
this report includes for at least the next five years a section dealing 
expressly with the UK-EU relationship in financial services.
Wholesale Markets Review
169. In line with the wider 
New chapter for financial services
, HM Treasury launched 
a review for consultation of the UK wholesale markets regime in July 2021, 
which closed in September 2021.
224
The proposals are wide ranging and 
cover issues such as the derivatives trading obligation, which determines 
where derivatives can be traded, and the production of market data. They 
also clarify what is and is not included within the scope of FCA regulation.
170. In November 2021, at a speech to UK Finance, the Economic Secretary 
emphasised the Government’s intention to legislate as soon as possible for 
changes arising from the consultation, to make changes to the transparency 
regime for fixed income and derivatives markets to “remove unnecessary 
burdens for firms”, and in line with the UK Listings Review, to introduce a 
220 
Q 68
221 
Q 70
222 HM Treasury, ‘UK Listings Review: Government response’, (21 April 2021): 
https://www.gov.uk/
government/publications/uk-listings-review/uk-listings-review-government-response
 [accessed 7 June 
2022]
223 
Q 65
224 HM Treasury, 
UK Wholesale Markets Review: Consultation
(July 2021): 
https://assets.publishing.
service.gov.uk/government/uploads/system/uploads/attachment_data/file/998165/WMR_condoc_
FINAL_OFFICIAL_SENSITIVE_.pdf
[accessed 7 June 2022]

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45
THE UK-EU RELATIONSHIP IN FINANCIAL SERVICES
“simpler, more agile and more effective” approach to listings with the aim of 
making it easier for firms of all sizes to raise capital.
225
171. The Wholesale Markets Review was widely welcomed by witnesses. For 
example, Sir Jon Cunliffe noted that “the Wholesale Markets Review, which 
the Treasury is carrying out, will also be of benefit, because at the moment 
access to the UK market is a bit like a series of archaeological layers”.
226
Solvency II Review
172. The Government is also currently running a consultation as part of its 
review of the Solvency II regime, which governs the prudential regulation of 
insurance firms in the UK. It was highlighted to the Committee that the EU 
is also reviewing its own legislation in this area, creating a potential point of 
divergence.
227
173. The Government recently announced that the forthcoming Financial 
Services and Markets Bill will include an overhaul of the Solvency II 
regime. In his evidence, the Economic Secretary described these reforms as 
“massively important”.
228
174.