BAFA Calls for Stronger U.S.-UK Financial Regulatory Cooperation

The British American Finance Alliance ("BAFA") — a coalition of leading U.S. and UK financial and professional services organizations — outlined a strategic agenda for deepening regulatory, trade, and technological cooperation between the United States and the United Kingdom.  

BAFA presented its recommendations in a policy paper directed at the Financial and Regulatory Working Group ("FRWG") and the newly formed Transatlantic Taskforce for Markets of the Future. The recommendations are organized around three core themes: trade and market access, technology, and "proportionate regulation."

1. On Trade and Market Access.
   • Extend Trade Agreements. BAFA recommended building on the U.S.-UK Economic Prosperity Deal (May 2025) by extending it to include financial services and a digital economy agreement, with a focus on securing the free flow of data.
   • Cross-Border Access. BAFA urged the implementation of a mutual recognition or substituted compliance program to allow registered investment advisers from one country to serve institutional clients in the other.
   • Talent Mobility. BAFA supported the alignment of professional qualifications and standards to facilitate the movement of skilled professionals between the two countries.
   • Insurance. BAFA called for continued support and expansion of the U.S.–UK Covered Agreement on insurance.
2. On Technology. 
   • Digital Assets. BAFA encouraged the development of interoperable and pro-innovation regulatory frameworks for digital assets to prevent market fragmentation and regulatory arbitrage. 
   • Data Flows. BAFA urged both governments to sustain and expand the U.S.-UK Data Bridge and to oppose forced data localization policies.
   • Operational Resilience. BAFA recommended aligning operational resilience frameworks, including harmonized third-party risk management and streamlined incident reporting requirements.
   • National Security. BAFA called for enhanced intelligence sharing and collaboration on cybersecurity threats, sanctions implementation, and vulnerabilities in critical financial infrastructure.
   • Quantum Readiness. BAFA also stressed the importance of quantum readiness, urging both countries to develop migration strategies to quantum-resistant cryptographic standards.
3. On "Proportionate Regulation."
   • Basel 3.1. BAFA supported coordinated implementation of Basel 3.1 ("Endgame") standards to avoid capital fragmentation, ensure comparability, and maintain capital neutrality.
   • Regulatory Fragmentation. BAFA recommended encouraging "home-host" deference to reduce duplicative regulatory burdens for cross-border banking groups.
   • Capital Requirements for Asset Managers. BAFA called on the UK to align its capital requirements for asset managers with the U.S. approach, which does not base requirements on assets under management.
   • Reporting Standards. BAFA urged both governments to preserve the existing equivalence treatment that allows foreign private issuers to use either IFRS or U.S. GAAP without reconciliation.
   • Dual-Listing. BAFA recommended removing legal, tax, and regulatory barriers to facilitate more efficient dual-listing of companies in New York and London.

BAFA also underscored the need for a more structured and transparent dialogue between regulators and industry to strengthen U.S.-UK cooperation. BAFA proposed several measures, including: (i) formalizing industry input through regular consultation, (ii) providing clearer outcomes from FRWG and Taskforce meetings, and (iii) enhancing engagement through greater ministerial and private-sector participation.