The governments of the US and the UK held its second meeting of the US-UK Financial Regulatory Working Group in Washington, DC. The inaugural meeting of the Working Group took place in September 2018.
The Working Group was formed to improve “bilateral regulatory cooperation with a view to the further promotion of financial stability; investor protection; fair, orderly, and efficient markets; and capital formation in both jurisdictions.”
As part of the excursion to the US, the two countries announced a “Financial Innovation Partnership” focusing on Fintech.
The Partnership between the US Department of the Treasury and the UK’s HM Treasury is said to:
“build on and deepen bilateral engagement on emerging trends in financial services innovation. This will include encouraging collaboration in the private sector, sharing information and expertise about regulatory practices, and promoting growth and innovation.”
The two countries host the most robust markets and financial services sector in the world. The UK is well known for its promotion of financial innovation and principle-based approach to regulation which has facilitated Fintech growth.
Heath Tarbert, Acting Under Secretary for International Affairs at the U.S. Department of the Treasury, commented:
“Technology is the future of financial services, and innovation drives growth. By jointly fostering entrepreneurial breakthroughs, we will write a new chapter in the longstanding friendship between America and Britain.”
“The United Kingdom and United States lead the world in financial services, and are at the cutting edge of innovative Fintech. By working more closely together through this new partnership we can help firms in both our countries to go even further to harness new technologies, share expertise and serve consumers.”
Gilbert B. Kaplan, Under Secretary for International Trade at the U.S. Department of Commerce, said he expected the partnership to drive bilateral financial services collaboration and expand opportunities for firms from both countries at the intersection of financial services, technology, and international commerce.
“The United States is the United Kingdom’s largest bilateral trading partner, so it is brilliant to see this commitment to increase commercial and regulatory cooperation between our leading financial services sectors. Today’s announcement is another positive step toward deepening the already extensive economic ties between the United Kingdom and United States,” stated Graham Stuart MP, Minister for Investment.
The Financial Innovation Partnership or “FIP” will focus on two main areas:
- Regulatory Engagement: Dialogue between authorities and with the private sector is critical to identify and address potential regulatory synergies, share lessons, and develop closer working relationships. The United States and United Kingdom will build on existing regulatory cooperation by discussing regulatory developments and sharing experiences on technical issues related to innovation in financial services.
- Commercial Engagement: The FIP seeks to promote a dynamic private sector that supports entrepreneurs and new business models – a necessary driver of financial innovation. It will provide enhanced and regular opportunities for the private sector in one country to engage with industry associations, and market participants in the other country. Through the FIP, the UK Department of International Trade (DIT) will bring UK firms to the United States and the U.S. Commerce Department will coordinate trade promotion missions to the United Kingdom.
Regarding the Working Group, this entity takes on more import as Brexit questions linger and the chance for a hard separation from Europe grows.
The UK government has been working around the clock to establish firm bilateral relationships around the world to help mitigate any potential fallout once the country exits Europe. A stronger relationship with the US simply makes sense.
According to a note from HM Treasury, the meeting included senior staff from the US Department of the Treasury and HM Treasury, and from the US and UK independent regulatory agencies, including the Board of Governors of the Federal Reserve System, Commodity Futures Trading Commission (CFTC), Federal Deposit Insurance Corporation (FDIC), Office of Comptroller of the Currency (OCC), Securities and Exchange Commission (SEC), the Bank of England (BoE), and the Financial Conduct Authority (FCA).
Participants were said to have discussed the “outlook for financial regulatory reforms and future priorities, including possible areas for deeper regulatory cooperation to facilitate further safe and efficient financial services activity between U.S. and UK markets.”
HM Treasury said that “both sides recognized the importance of financial innovation,” meaning Fintech, and “took note that U.S. Treasury and HM Treasury will soon launch a partnership to promote further engagement on financial services innovation, including with firms seeking to grow internationally in our markets.”
The next meeting of the Working Group will take place later in 2019 in London.