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City of London breathes sigh of relief on Brexit deal to secure financial crown

UK and EU negotiators have secured a deal on the future relationship for financial services firms operating in the two jurisdictions after Brexit, The Times newspaper reported on Thursday.

Citing UK government sources, the Times reports that the two sides have struck a "tentative" deal that will allow the UK "continued access to European markets" once Britain has left the EU.

Securing a deal for financial services has been seen as one of the most difficult parts of Brexit talks because of the highly international, highly regulated nature of the industry. Britain currently relies on a system of so-called "passporting," but will likely need a new framework for its relationship after Brexit.

Passporting rules allow EU finance companies to sell their services across the 28-member bloc with a local license, rather than getting a license to operate in each member country where it does business. Its use is tied to membership of the European Single Market. Britain is likely to leave the Single Market as part of Brexit and will no longer be able to do business using these rules once it has left the EU.