EU set to gain clearing house business after Brexit

The relocation of the multi-billion-euro business to a city within the EU is likely to happen once Britain leaves the bloc.

As per an official from the European Union, the bloc is considering legislative measures to relocate London’s euro-denominated clearing business to a location within the euro zone.

This relocation will only happen once Britain leaves the bloc.

Currently, London dominates in the clearing of derivatives in euros mainly through the London Stock Exchange (LSE).

The move to relocate this multi-billion-euro business to a city within the Eurozone, such as Frankfurt, have gained increased momentum following Britain’s referendum to exit the EU.

Advocates have long held the view that euro-denominated derivatives should be cleared within the EU.

Although the necessary ground work for this relocation will begin before Brexit negotiations, the actual move will only occur once Britain formally leaves the EU.

British Prime Minister, Theresa May has stated that formal Brexit negotiations are likely to begin before the end of this financial year, in March. As per EU’s chief negotiator, Michel Barnier, they could be over October 2018.

EU officials have said, any decisions on shifting of the clearing houses would be part of the negotiations with Britain. It would be premature to speculate what might be Britain’s relationship with the EU now.

As per a spokeswoman from the European Commission, the rules which govern the trading and clearing of derivatives are set by the European Market Infrastructure Regulation (EMIR).

EU’s executive commission is currently reviewing these rules with the aim of “simplifying and improving the existing rules”.

She went on to add, “Any other EMIR-related issues may be further assessed and developed in due time, taking into consideration future developments.”


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