The Association for Financial Markets in Europe, unlike other lobby groups in the City of London, has not formally backed proposals for mutual recognition of U.K. financial regulation by the European Union after Britain leaves the bloc, association Chairman Michael Cole-Fontayn told Reuters.

Cole-Fontayn signaled that members, which include British lenders HSBC Holdings PLC and Barclays PLC and Wall Street banks Goldman Sachs Group Inc. and Morgan Stanley, are open to building on the so-called equivalence regime, according to the report.

"We are pragmatic in recognizing that markets will and need to continue to function," Cole-Fontayn reportedly said.

"The negotiations are highly political but we would naturally want to be constructive in providing input into whatever model is ultimately taken forward to seek the most optimal outcome possible under the political constraints."

The association is involved in consultations by the European Commission and European Parliament on equivalence, Reuters said. Its members are planning to open new hubs outside Britain or expand existing operations in the EU by March 2019, instead of counting on the two sides to agree on market access.