Yahoo Finance Brussels to make a move for London's multi-billion euro-clearing market
Brussels is gearing up to make a move for London’s position as the world’s prime euro-clearing centre.
Proposals are believed to be in the pipeline to impose more EU-centralised control of the vital euro-clearing market.
The plans could force British businesses involved in the area to relocate to Europe or submit to regulation from the EU.
According to the Financial Times, a draft policy document proposes “more centralisation of supervision” of clearing businesses in the EU if they provide “critical capital market functions”.
The FT says London processes up to three-quarters of global euro-denominated derivatives and clears approximately €850bn (£720bn) per day.
Clearing is the procedure by which an organisation acts as an intermediary and assumes the role of a buyer and seller in a transaction to reconcile orders between transacting parties. Clearing is necessary for the matching of all buy and sell orders in the market.
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Both France and Germany have indicated Brexit will put a brake on London’s dominant position in the area of euro-clearing.
The FT says the proposals could be published as early as June. For non-EU firms, “specific arrangements based on objective criteria” will be made to ensure those that play a “systemic role” in EU financial markets are subject to EU laws.
“This includes, where necessary, direct supervision at EU level [and/or] location requirements,” the document quoted by the paper said.
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These proposals will add yet another sticky layer on the ongoing Brexit negotiations facing prime minister Theresa May and her team.
Last year, consultants EY warned some 83,000 jobs in London could go if the City lost the euro-clearing business.
