London and Brussels have taken their first steps, post-Brexit on a provisional agreement for financial services.
A non-legally binding agreement Memorandum of Understanding (MoU) sets out the framework for the future in establishing a regulatory dialogue.
The Treasury confirmed discussions had taken place but nothing has been published yet and it does not guarantee the City will ever gain access to the European markets.
Before the MoU can be signed formal steps need to be undertaken on both parties, once the MoU is signed it will create the framework for voluntary regulatory cooperation in financial services between the UK and the EU.
The MoU will establish the joint UK_EU financial regulatory forum, which will form part of a platform to facilitate dialogue on financial services issues.
The EU needs to grant Britain equivalent agreements to allow them access to its markets.
The memorandum is a good first step but is not a guarantee that the City will gain access again to EU markets. This is a positive sign between the two sides and lead to an agreement being granted.
That said, EU financial services firms have been granted access to UK markets via temporary regimes, but Brussels has refused to cooperate as they fear the UK could diverge from EU rules.