The City of London is stepping up its Brexit lobbying work with the UK government, fearing that a planned future financial services trading and regulatory system, in the view of senior financiers, will be inappropriate.
The EU and the United Kingdom agree on an agreement whereby cross-border trade in financial services should be based on a so-called "enhanced equivalence system" after Brexit, but city financiers fear that the agreements are far behind what is needed.
The Brexit negotiators have drafted a short text on financial services that would go into a planned political statement on the relationship between Britain and the EU after Britain left the bloc.
"The deal that has been concluded appears to be essentially a no-deal," said a US bank executive, complaining that the UK government's policy of pursuing an "enhanced equivalence" rule was based on confidence existing cross-border trade agreements, with which the EU recognizes the legal framework of some third countries as "equivalent".
"We do not even seem to be asking for improvements," added the executive, which said that it is asking the British government for assurances on this issue.
Hugh Savill, director of regulation at the Association of British Insurers, a trade association, said: "A long-term future agreement based on the EU's current equivalence system would not offer British insurers much."
Large parts of the city were dissatisfied in the summer when the government adopted "enhanced equivalence" as the official negotiating position with the EU and abandoned a previous plan to combat a "mutual recognition" system.
This approach would essentially have replicated the current regime that allows banks, insurers and asset managers based in one Member State to sell their services across the EU in accordance with the passport rules of the block.
Mutual recognition, however, was considered impractical by Michel Barnier, the EU's chief negotiator in Brexit.
Since the summer, the city has largely recovered behind the improved equivalence concept, with a focus on hoped-for improvements.
In particular, City financiers have expanded the areas where the equivalence principle applies to activities such as securities trading, corporate lending and insurance, which are not covered by the relevant EU Directives.
However, a person who was close to the Brexit negotiations said that this had been removed from the agenda, which means that the alleged deal focused only on capital market activities that were already covered by EU legislation with an equivalence clause.
Alan Houmann, Head of Citigroup Government Department in London, said, "Early clarity would be very welcome."
The other potential improvement that the UK has pushed for is a more solid basis for an equivalence system than the standard agreement, which allows the European Commission to terminate the agreement with 30 days' notice. Officials have spoken privately of an extension up to 300 days.
Catherine McGuinness, chair of the City of London Corporation, the local authority of the financial district, said she "cautiously greets the signs of progress," adding that the negotiators had given a reason to "but we have a lot to do." ,
Additional reporting by Oliver Ralph