Yahoo Finance UK Wins ECB Euro Clearing Court Fight
The Government has won a legal challenge to a European Central Bank (ECB) decision which potentially threatened thousands of jobs in the City of London (LSE: CIN.L - news) .
The EU's General Court ruled the ECB was wrong to insist that euro clearing house work should be based in a single currency member state.
The UK, which is a member of the EU but does not use the euro, argued in Luxembourg that the move contravened the EU's single market principles.
The court said: "The ECB does not have the competence necessary to impose such a requirement on central counterparties involved in the clearing of securities."
Clearing houses stand between the two sides of stock and bond trades, ensuring smooth completion of transactions.
The ECB had argued that having clearing houses which handle more than €5bn of euro-denominated securities inside the eurozone would make it easier to intervene if they got into trouble.
But the court said the bank did not have the regulatory powers it required for such a move.
Lawyers had said a failure of Britain's legal challenge could have forced several operations, including the London Stock Exchange (Other OTC: LDNXF - news) 's LCH.Clearnet clearing house, to shift large chunks of business to continental Europe.
The case marks a rare European court victory for the Government.
It lost a case over short selling securities, and last November withdrew a challenge to the EU's cap on banker bonuses.
The Chancellor George Osborne said it highlighted the importance of a level playing field across Europe's single market.
He said: "That's why we brought a legal challenge against the ECB's utterly discriminatory location policy, and why we welcome today's ruling from the European Court of Justice which strikes this policy down.
"This is a major win for Britain and a major win for all those who want to see a European economy that is both open and successful."
Chris Cummings, chief executive of TheCityUK, said: "Given London, as Europe's financial centre, clears more euro-denominated transactions than anywhere in the EU, today's ruling is a good outcome for Europe."
