The scope for negotiations on regulatory change – both by the UK and the EU, will be constrained by agreements both parties have previously made. Whilst EU only regulations could be thought about differently, a large swathe of regulations that affect the energy and commodity markets are driven by the G20 commitments that followed the 2008 financial markets crash.
In particular, the G20 Pittsburgh Summit included an “Open Global Economy” commitment. This undertaking by the G20 – where both the EU and the UK were represented, included;
“…keep(ing) markets open and free, refrain(ing) from raising barriers or imposing new barriers to investment or to trade in goods and services…” or “…imposing new export restrictions …”
G20 members also agreed …
“…not (to) retreat into financial protectionism, particularly measures that constrain worldwide capital flows…”
Accompanying these commitments and agreements was a move to strengthen the International Financial Regulatory System, and this included taking action…
“…at the national and international level to raise standards together so that [our] national authorities implement global standards consistently in a way that ensures a level playing field and avoids fragmentation of markets, protectionism, and regulatory arbitrage.”
In addition, G20 members agreed to;
“… improve the regulation, functioning, and transparency of financial and commodity markets to address excessive commodity price volatility.”
These last points have led – in a large part, to the financial and commodity market regulations that we face today, including; REMIT, EMIR, MiFID2 and the Market Abuse Regulations.
So, what does this mean?