Mr. Gerry Cross:

That is an important question and one on which we have been very focused over the past six months. It is important to recognise that the Brexit effect is giving rise to a set of new issues that we have not had to deal with before such as the issue of substantive presence, that is, the extent to which a firm is substantively present in a jurisdiction. While that is not a new issueper se, it is new the force and intensity with which it now arises. Similarly, there are technical issues such as how much risk one can back out to one's UK parent. There are a range of new issues. The question of how much one can rely on the fact that a particular firm is already authorised by the UK. Can one therefore fast-track it? All these are new and challenging issues which need to be considered. When we started the process some six or eight months ago, different jurisdictions were in slightly different places on that and it was not clear what the right answer was. Going from one jurisdiction to another, firms could see that there were different approaches in one place to another. Quite quickly, we and others raised the need for consistent answers to this with the European authorities, whether it was the Single Supervisory Mechanism for banks or the European supervisory authority for insurance companies and for markets firms and so on, or else there would be a very difficult situation where firms were given different answers in different countries. Progress on this has been substantial. Over the past six months and over the past ten weeks in particular, we have seen a real change in the dynamic. The Single Supervisory Mechanism, SSM, came out with guidance five or six weeks ago on these issues. That changed the nature of the debate. Firms immediately saw that there was European guidance on the issues. On the supervisory authorities, ESMA has been very active from the beginning, EIOPA has been active and the European Banking Authority is also developing guidance which we can expect to see emerge over the coming short period. Already everyone in the market knows that guidance is coming and probably has a good sense of what it will say. We welcome that and have been actively engaged in it and, as Mr. Sibley said, are at the forefront of it.

There is no point in having guidance if it is there in letter but does not do much. However, the supervisory authorities are putting in place modalities and mechanisms for giving effect to it. They are limited in their legal powers. They do not have strong enforcement powers against authorities but they are putting in place interesting methods for checking what different jurisdictions are doing in real time to understand the types of decisions or issues and how they are being resolved in different jurisdictions. I cannot get ahead of this. We are expecting some of these things to be published in the period ahead, but it is a significant step forward in creating a level playing field.