U.S and UK financial and professional services

US and UK 昀椀nancial and professional services: growing together

Foreword Introduction: the opportunity Policy and regulation Aligning US and UK approaches Investment and capital 昀氀ows Sector focus Looking ahead US and UK 昀椀nancial and professional services: growing together Contents Foreword 3 Introduction: the opportunity 4 Policy and regulation: removing friction 5 Aligning US and UK approaches 6 Investment and capital 昀氀ows 7 Sector focus Banking and capital markets 8 Asset management 9 Tech 10 Insurance 11 Professional services 11 Looking ahead: how we can help 12 2

Foreword Introduction: the opportunity Policy and regulation Aligning US and UK approaches Investment and capital 昀氀ows Sector focus Looking ahead Foreword US and UK 昀椀nancial and professional services: growing together Chris Hayward, Policy Michael Mainelli, The Rt Hon Edward Price, Managing Chairman, City of the Lord Mayor of the City Director, City of London London Corporation of London Corporation in the US “US-UK leadership on the global stage has never been “The US-UK relationship in 昀椀nancial and professional “The City of London Corporation has o昀케ces around more important. As the world’s two leading 昀椀nancial services is already of huge value to both partners. the world. We promote global collaboration on shared centres, deeper US-UK collaboration will shape global With new opportunities emerging in 昀椀ntech, digital assets, opportunities and challenges. And we support the capital policymaking in areas of shared interest, helping to AI, cyber and climate insurance, among others, now is the 昀氀ows and investment so vital for economic growth. develop the international coalitions and standards needed time to deepen the existing relationship and accelerate Establishing a presence in the US for the 昀椀rst time for the future. growth in our two leading 昀椀nancial centres. re昀氀ects the City of London Corporation’s commitment Policy leadership in new growth areas, such as data Take the example of climate insurance. The US is the to deepen collaboration with a key ally and trading sharing, digital assets and AI, will bring together like- largest market for climate-risk related insurance by partner at a moment of profound technological, strategic, minded partners. This would enable innovation, the demand. Yet local US insurers cannot always take on and geopolitical change. development of new commercial opportunities and these large complex risks. This is where the London I am delighted to be heading the new o昀케ce at such ultimately supporting global growth for the sector. Market comes in. As a leader in excess and surplus lines a critical juncture and look forward to working with The 昀椀nancial and professional services sector is inherently with large capital volumes and specialist expertise, it can stakeholders on both sides of the Atlantic.” international. The US and UK recognise the importance of complement US capacity to the bene昀椀t of 昀椀rms in both open global markets and the rules-based international countries.” order so vital for supporting innovation, providing security, and underpinning prosperity.” 3

Foreword Introduction: the opportunity Policy and regulation Aligning US and UK approaches Investment and capital 昀氀ows Sector focus Looking ahead Introduction: the opportunity US and UK 昀椀nancial and professional services: growing together The US-UK partnership runs broad and deep. We have much in common: shared values, language and cultural ties as well as a strong cooperation on defence and security, mixed market economies and comparable regulatory approaches. This solid foundation creates ample commercial opportunity for 昀椀nancial and professional services (FPS) 昀椀rms in both countries. It also makes sense for two highly sophisticated 昀椀nancial services jurisdictions, to collaborate to manage risks and capture opportunities. The City of London Corporation is “As a 昀椀rm with 200 years of history in London – with the city once establishing an o昀케ce in the US for the counting J. Pierpont Morgan himself among its residents – and with 昀椀rst time. This re昀氀ects our commitment to our global headquarters in New York, J.P. Morgan is a truly transatlantic deepen collaboration with a key ally and 昀椀rm. The US-UK economic relationship is one of the strongest in trading partner. the world, underpinned by a shared mindset across 昀椀nancial and Now is the time to work together to reduce professional services sectors, and the power of London’s ecosystem friction and increase trade through two remains pivotal to our international business model. We welcome the opening of the City of London’s o昀케ces in the United States, which interconnected levers: policy and investment. will be a boost to the dynamic policy work that takes place across the Atlantic by policy-makers and practitioners every day.” Vis Raghavan, CEO of EMEA and Co-Head of Global Investment Banking, J.P. Morgan 4

Foreword Introduction: the opportunity Policy and regulation Aligning US and UK approaches Investment and capital 昀氀ows Sector focus Looking ahead Policy and regulation: removing friction US and UK 昀椀nancial and professional services: growing together The UK government is committed to The UK was the 昀椀rst 昀椀nancial centre globally to launch keeping the UK at the cutting edge of global a digital sandbox and open banking framework. Since innovation, and is implementing a responsive then, it has introduced a Financial Market Infrastructure and supportive policy environment with (FMI) sandbox to provide the infrastructure services that “We’ve been heartened by the openness to global business at its heart. underpin markets and make it easier for 昀椀rms to adopt new technologies. It has also expanded its successful government’s enthusiasm to establish The UK is one of the most open, connected and global open banking regime to include ‘open 昀椀nance’. This the UK as a global hub for digital will provide clear regulatory standards for a broader 昀椀nancial centres. It levies fewer restrictions on the assets. Our engagement with local movement of capital and people than many of its range of consumer products and services, helping 昀椀rms 1 identify new areas for growth. The UK’s successful open policymakers has been extremely competitors and 昀椀rms in the UK face lower policy- banking framework has been emulated by many other 2 constructive. This collaborative induced trade costs, according to an OECD assessment. jurisdictions looking for ways to embed innovation in Combined with one of the largest global tax treaty approach, alongside the UK’s world- regulatory frameworks. networks, US 昀椀rms located in the UK can expect leading 昀椀nancial ecosystem, makes lower barriers to trade and investment, reducing their More recently, government and regulators have operational costs. The country’s new streamlined London a natural place for a global turned their attention to high-pro昀椀le and potentially immigration system also allows FPS 昀椀rms to recruit top transformative technologies. The government has company like Ripple to establish its talent from around the world. As of the 昀椀rst half of 2023, announced it will introduce legislation to bring regional presence.” there was a 23% YoY increase in visas granted to workers stablecoins into the UK payments framework. It will also 3 in the 昀椀nancial and insurance industries. consult on a regime for digital assets. In the AI space, the Eric van Miltenburg, SVP, Strategic government is committed to international cooperation The UK’s framework for 昀椀nancial services regulation on regulation, engaging with global partners on setting Initiatives, Ripple is also internationally respected. It was voted the top up common standards and principles to establish an regulatory market in a global survey of senior 昀椀nancial 4 interoperable and innovation-friendly international And it reached its 昀椀rst executives two years running. framework. It has also launched a new AI sandbox to milestone in reforming its 昀椀nancial sector post-Brexit, help organisations demonstrate that their innovations the passing of the Financial Services and Markets Act of meet regulatory requirements. June 2023. This shows its commitment to keeping this regulation agile and coherent. It also presents the private This forward-looking policy and regulation provide a sector in both the US and UK with a prime opportunity conducive and stable environment for international to shape the agenda. tech 昀椀rms. The fact that close to 4,000 of them are based in the UK – making it the largest hub in Europe – 5 This commitment to innovation also is testament to that. o昀昀ers the right conditions for cutting-edge products and services to be launched and scaled in the UK, providing US investors with a steady pipeline of opportunities. Sources: 1. Fraser Institute 2022 2. OECD 2019, 2021 3. Home O昀케ce 2023 4. Du昀昀 & Phelps 2021 5. fDi Markets accessed October 2023 5

Foreword Introduction: the opportunity Policy and regulation Aligning US and UK approaches Investment and capital 昀氀ows Sector focus Looking ahead Aligning US and UK approaches US and UK 昀椀nancial and professional services: growing together There is a prime opportunity to signal alignment in our policy and regulatory approaches, help build wider coalitions and shape international norms. From supply chains to governance, 昀椀nancial services to trade, the world is going through a period of fragmentation. This is a particular risk for open and outward-looking economies like the US and UK. Fragmented markets reduce growth and are inherently less stable. Together the US and UK can work against fragmentation, especially in 昀椀nancial markets. There is a prime opportunity to signal alignment in our policy and regulatory approaches and shape international norms. This will also enable us to anticipate and address market concerns, taking action on high impact areas including safe digital assets, economic crime, free 昀氀ows of trusted data, climate disclosure frameworks and transition 昀椀nance strategies. We have the mechanisms in place to do this, including the recently signed Atlantic Declaration which provides a clear roadmap for cooperation. The US-UK Data Bridge allows trusted data to 昀氀ow freely between our countries. Plans for a US-UK Trade Partnership Forum commit us to dialogue on key issues. And the US-UK “State Street has a long history investing in technology Financial Regulatory Working Group and US-UK Financial Innovation and innovations that contribute to the international Partnership bring our governments and major regulators together. 昀椀nancial system. Industry engagement in these various mechanisms will be critical to their success. It is here that the British American Finance Alliance (BAFA) convening both US and UK trade associations can play a key Collaborations between the UK and the US, both role in coordinating cross-sector input. on governmental and business levels, have been Jurisdictions around the world are looking for a clear direction of instrumental to the development and stability of the travel when developing future-昀椀t regulatory frameworks, and the US 昀椀nancial industry globally. With the ever-increasing and UK’s importance to international 昀椀nance means that decisions complexity, volume and importance of data, cross-border made together will have an impact well beyond their respective borders. US-UK policy leadership could help to build wider coalitions cooperation in this area will further aid prosperity in the with other like-minded partners, enabling innovation, catalysing new UK and the US.” commercial opportunities and supporting the sector’s global growth. Global challenges need global responses, and the US and UK are Cuan Coulter, Head of UK and Ireland, State Street Bank & Trust leading the way. 6

Foreword Introduction: the opportunity Policy and regulation Aligning US and UK approaches Investment and capital 昀氀ows Sector focus Looking ahead Investment and capital 昀氀ows US and UK 昀椀nancial and professional services: growing together The UK serves as a critical node for the global These strong bilateral trends have accelerated economy, connecting regions under a common signi昀椀cantly over the last 昀椀ve years – close to 25% uplift business language – UK common law governs in bilateral trade and 30% in two-way FDI. With new areas 40% of international corporate arbitrations. of growth emerging and strong collaboration between regulatory authorities on both sides of the Atlantic, there With a supportive policy environment working in parallel, are further opportunities to grow together. we can continue to build on the strong investment 昀氀ows between our two countries and capitalise on untapped opportunities within FPS, including banking, asset management, tech, insurance and professional services. $400bn+ 6 7 The US and the UK are key FPS trade and investment partners. Bilateral FPS trade stood at nearly $80bn in Two-way FDI in 昀椀nancial and professional 2022, while two-way foreign direct investment (FDI) services in 2022 8 reached around $450bn – and supported close to 9 150,000 jobs. Our two leading financial services centres already invest strongly in each other, “The UK has been Blackstone’s exchanging capital, talent, knowledge and innovation. European home for 23 years, and FDI stock in US FPS held by UK companies amounted to we are proud to be building our 10 with many 昀椀rms using their US presence as $105bn, new expanded headquarters in their regional North America HQ. Over 700 UK companies London. We believe that the ability engaged in close to 1,300 direct investment projects that 11 to attract global investment, great created around 60,000 US FPS jobs. businesses and world class talent On the other side of the Atlantic, FPS FDI stock in the UK will see the UK continue to thrive held by US companies was valued at $341bn in 2022 – for years to come.” a third of the stock held abroad. This showcases the UK’s strategic importance to US FPS companies. The UK Farhad Karim, COO Blackstone Europe is also the location of choice for many US businesses seeking European and Middle East (EMEA) headquarters, thanks to great domestic opportunities and international market access. Sources: 6. ONS 2022, BEA 2023 7. fDi Markets accessed September 2023 8. BEA 2023 9. fDi Markets accessed September 2023 10. BEA 2023 11. fDi Markets accessed September 2023 7

Foreword Introduction: the opportunity Policy and regulation Aligning US and UK approaches Investment and capital 昀氀ows Sector focus Looking ahead Sector focus US and UK 昀椀nancial and professional services: growing together The UK is a globally-connected hub of specialist and leading-edge products and services. Opportunities for US 昀椀rms abound in London and beyond – around two thirds of UK 昀椀nancial and professional services jobs are based outside of the capital. Banking and capital markets 12 “London was Goldman Sachs’ With more than 200 foreign banks, the UK boasts 昀椀rst overseas o昀케ce in 1970, and the most international and globally-connected 13 banking sector. over half a century later, our The UK is also a great launchpad for new banking commitment to the UK is stronger solutions, thanks to its pioneering open banking than ever. We’re proud of our broad and deep o昀昀ering across framework. In 2018, Goldman Sachs introduced its digital UK 昀椀nancial markets – partnering bank, Marcus, in the UK. By the end of 2022, Marcus had 14 attracted £23bn in savings deposits. with some of the country’s largest The sector is also growing steadily outside of the companies as they tap the capital markets to evolve and grow; capital, driven by a boom in tech and cyber. US banks supporting innovative UK startups “London and New York are two of the world’s leading have opened in Manchester (BNY Mellon), Birmingham through our growth equity business; 昀椀nancial centres and they are at the heart of Citi’s (Goldman Sachs), Edinburgh (J.P. Morgan), and Glasgow global network. Our signi昀椀cant presence in both (Morgan Stanley). and o昀昀ering market-leading rates to UK savers. With over 6,500 sta昀昀 markets, coupled with our unique global footprint, across our London HQ and strategic ensures we are able to deliver as the preeminent 200+ locations in Birmingham and Milton banking partner for clients with cross-border needs. Keynes, we bene昀椀t every day from Deeper collaboration between the two countries is the UK’s strong talent ecosystem Foreign banks have a UK presence and global links. And this long- as critical as ever for international businesses, and term commitment to the UK goes we value the City of London’s e昀昀orts to showcase the beyond 昀椀nancial services, with our strength and talent that this city and UK 昀椀nancial 10,000 Small Businesses programme services have to o昀昀er globally.” supporting entrepreneurship and growth across the whole economy.” Tiina Lee, Chief Executive O昀케cer, Citi UK Richard J. Gnodde, CEO, Goldman Sachs International Sources: 12. Association of Foreign Banks and Bank of England 13. Bank of International Settlements 2023 14. Financial Times 2022 8

Foreword Introduction: the opportunity Policy and regulation Aligning US and UK approaches Investment and capital 昀氀ows Sector focus Looking ahead Sector focus US and UK 昀椀nancial and professional services: growing together Asset management Virtually all US managers among the world’s Top 50 have a physical presence in the UK, often for their international headquarters. And they continue to expand, with Blackstone and M12 recently setting up a new infrastructure investment team in London and Rockefeller Asset Management International and Apollo Management opening their 昀椀rst 15 international o昀케ce. Firms are also setting up outside London, such as Vanguard (Manchester) and Blackrock (Edinburgh). Other 昀椀rms like Franklin Templeton have portfolio managers in London, Edinburgh and Leeds. This is because the UK o昀昀ers access to clients around the world, global investment opportunities and expertise in a wide range of asset classes and sectors. Large US asset owners such as The New York State Common Retirement Fund (NYSCRF) and California Public Employees’ Retirement System (CalPERS) have both allocated real estate and 16 infrastructure mandates here. US investors consistently make up the largest single client base for the UK asset management sector. Assets managed in the UK on behalf of North American clients were valued at £845bn in 2022 – around 20% of assets managed for 17 overseas clients. £845bn “As a global investment manager, the UK is an important and strategic location for our international business. The availability of key Assets managed on behalf of North American clients from the UK talent, convenient time zone and supportive regulatory and policy frameworks, in addition to the attractiveness and scale of the local market, are important factors in our choosing to locate global and regional talent and functions in London, Edinburgh and Leeds.” Martyn Gilbey, UK Country Manager, Franklin Templeton Sources: 15. fDi Markets accessed October 2023 16. Pitchbook 2023 17. Investment Association 2023 9

Foreword Introduction: the opportunity Policy and regulation Aligning US and UK approaches Investment and capital 昀氀ows Sector focus Looking ahead Sector focus US and UK 昀椀nancial and professional services: growing together Tech From payments to regtech, insurtech and climate tech, OpenAI, the San Francisco-based company and owner of the products and services launched and scaled in the UK ChatGPT opened their 昀椀rst international o昀케ce in London 22 this year. Likewise, C3, the AI digital transformation provide investors with a steady pipeline of opportunities. The UK tech industry accounted for over half of the business listed on NYSE relocated their EMEA 23 headquarters to London. investment 昀氀ows from US managers and institutional 18 investors. In 2022, the US was the largest source of Many US 昀椀nancial services 昀椀rms also pilot their 19 investment in UK tech. innovation projects in the UK, thanks to an innovation- friendly regulatory and policy environment. For example, UK 昀椀ntechs also have enormous opportunities to expand the Citi group kickstarted its blockchain and digital assets in the US. For example, payment 昀椀ntechs like SumUp and business in London in 2021. J.P. Morgan set up a new GoCardless are global leaders whose tested and low-cost digital platform under the Chase brand and plans to solutions can 昀椀ll a gap in the US market. 24 double its UK headcount to 2,000 by 2024. Over 1,800 US tech 昀椀rms and counting have a UK 20 presence. As the largest tech hub in Europe, the UK serves as an ideal entry point for US AI 昀椀rms looking to expand. Firms based here can also take advantage “We chose London as our 昀椀rst of an exceptionally strong and diverse talent pool that o昀케ce outside of the US because excels in both traditional and emerging specialisms: the combination of incredible for example, London boasts the highest proportion 21 of AI engineers in Europe. universities across the UK, a deep capital market, and the potential for clear and practical regulation all point to the UK’s potential to 1800+ become a global web3 centre and hub of innovation.” US tech 昀椀rms in the UK Brian Quintenz, Global Head of Policy, crypto, Andresseen Horowitz Sources: 18. Pitchbook 2021 19. fDi Markets accessed October 2023 20. fDi Markets accessed October 2023 21. Sifted 2023 22. Silicon UK Tech News 2023 23. C3.ai 2023 24. fDi Markets accessed October 2023 10

Foreword Introduction: the opportunity Policy and regulation Aligning US and UK approaches Investment and capital 昀氀ows Sector focus Looking ahead Sector focus US and UK 昀椀nancial and professional services: growing together Insurance “The London Market is the Professional services The UK is the world’s largest and most mature commercial and largest commercial and specialist The UK is a global centre for professional services as well as a global specialist insurance market, operating in over 200 countries insurance market in the world, 昀椀nancial centre – and the two are closely connected. Having access to worldwide. Every one of the top 20 global insurance and reinsurance high-quality and specialised management consulting, legal activities 昀椀rms has a presence in London. with 7.6% of global market share. and accounting services is crucial for business success. North America is the largest source of business for the London Market We support clients with a huge The UK is the largest supplier of professional services imports in the – around 38% of business comes from the region. The US is also the number of complex deals across US – $12bn in 2022, accounting for 19% of total imports in the sector. London Market’s largest source of capital – 23% of the London Market all types of risks – including in new The vibrancy and diversity of the UK’s management consulting premium was held by US companies. technologies and climate risk – and industry, from large international 昀椀rms to boutique specialists, makes Lloyd’s of London is the largest provider of surplus lines insurance a lot of that capital is reinsured or it well placed to advise US businesses on a variety of emerging areas. (insurance against large 昀椀nancial or uncommon risks) in the US with These include digital transformation and sustainability, where the structured via London because of 26 around 16% of the market share. It provides specialist insurance industry has seen the largest growth globally. The UK is also a great against risks that are too complex to be insured by local US providers. the technical ability and wide range launchpad for US professional services 昀椀rms looking to expand. And it has the pool of capital that allows it to take on and pay out of platforms and expertise we have these complex risks. In 2022, $15bn of the surplus lines premium 25 at our disposal here.” was written through Lloyd’s syndicates. $12bn As demand for climate-related (re)insurance grows in the US, Mark Parker, Head of Aon’s London- the UK’s long-standing expertise in large and uncommon risks can US professional services imports from the UK based Global Broking Centre be counted on in the absence of US solutions, to bene昀椀t 昀椀rms in both countries. “The UK has always been the go-to market for US professional services businesses and 16% their clients to expand their global presence. Finance, talent and access to customers across London Market’s share of US surplus lines, multiple sectors as well as business cultural making it the largest provider alignment between the US and UK provide a natural entry point for expanding into the UK and beyond.” Steve Wilson, US Managing Partner, Osborne Clarke Sources: 25. London Market Group 2022 26. MCA 2023 11

Foreword Introduction: the opportunity Policy and regulation Aligning US and UK approaches Investment and capital 昀氀ows Sector focus Looking ahead Looking ahead: how we can help US and UK 昀椀nancial and professional services: growing together At a time of profound technological The US is a priority market for the Corporation Our o昀昀er to the US: and geopolitical change and increasing and opening an o昀케ce accelerates our fragmentation, strengthening ties with commitment to supporting US-UK trade and investment in FPS, building on our existing deeply connected partners becomes Signposting a UK-wide network all the more important. engagement and programmes. of partners who can help with set up, expansion, and trade The City of London Corporation’s work in the US with the UK In the short term, both the US and UK need covers both policy and regulatory engagement to address the challenges arising from a as well as promotion of trade and investment shifting macroeconomic environment, with opportunities. We engage with government on high in昀氀ationary pressures and the end of both sides of the Atlantic to try and break down low interest rates. Medium term, both will trade barriers for FPS 昀椀rms looking to do more Leading outbound be focused on opportunities brought about business with one another. Expanding your trade delegations and by digitisation and the impact of disruptive access to an We look forward to working with you to support welcoming inbound technologies on the FPS sector. The transition ecosystem of UK more businesses to trade and invest across the trade delegations to net zero, especially the energy transition, industry stakeholders, Atlantic, so we can continue to grow together. from key FPS sectors is another priority area. Longer term, the US partners and to build networks and and the UK need to ensure that FPS is a sector policy leaders which powers equitable growth across both Find out more at www.theglobalcity.uk/US or explore opportunities countries, delivering security and prosperity to email us at USo昀케ce@cityo昀氀ondon.gov.uk all our citizens. To support this growth into the future, The City of London Corporation is delighted to be launching a new o昀케ce in the US, Working with allies in Providing insights including sustained engagement in both the public and private on UK policy New York and DC. sector in support of developments and open markets and their relevance to US regulatory coherence stakeholders Speaking at key FPS events and supporting engagement with UK 昀椀rms 12

About the Global City campaign: About the City of London Corporation: The Global City campaign is the City of The City of London Corporation is the London Corporation’s overarching initiative governing body of the Square Mile dedicated to promote the UK as a world-leading to a vibrant and thriving City, supporting a international 昀椀nancial centre. It showcases diverse and sustainable London within a the UK as a great place for 昀椀nancial globally successful UK. and professional services 昀椀rms to invest, We aim to: locate and grow. • Contribute to a 昀氀ourishing society www.theglobalcity.uk • Support a thriving economy • Shape outstanding environments By strengthening the connections, capacity and character of the City, London and the UK for the bene昀椀t of people who live, work and visit here www.cityo昀氀ondon.gov.uk