London determined to stay top in euro derivatives clearing, LSE says

  • 12/1/2020
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LONDON (Reuters) - The City of London is determined to make sure that it remains the top centre for clearing euro-denominated financial derivatives, a senior London Stock Exchange official said on Tuesday, as Britain’s finance industry steps up its lobbying for permanent access to the European Union after Brexit. Policymakers in the bloc see Britain’s full departure from the EU on Dec. 31 as a chance to shift large chunks of clearing in widely used euro derivatives from London to Eurex in Frankfurt. As banks have moved so few holdings, the EU has given temporary “recognition” to let the LSE’s LCH unit keep serving EU customers until mid-2022 - although EU banks will still have to shift trading of the contracts from the UK to the bloc from Jan. 1, after a post-Brexit standstill agreement expires. “The constant message we have had from all customers, all clients, EU and otherwise, is that they want to continue to have access because of the access to liquidity,” LSE head of clearing Daniel Maguire told an online event held by the U.S. settlement house DTCC. LCH was “pretty secure”, with volumes increasing, he said. “We need to leave the politics aside and move to the next phase, and we are hoping to secure some degree of permanent recognition in the months and years to come.” Before the EU decides on long-term access, its European Securities and Markets Authority (ESMA) is reviewing whether euro clearing is too important to stay outside the bloc. ESMA Chair Steven Maijoor said on Tuesday this assessment will consider the degree of cooperation in information-sharing between the EU and LCH’s home regulators in Britain. The “base case” is that markets are global and activities should be undertaken where there is expertise, though such expertise was being built up inside the bloc, Maijoor told an Afore Consulting event. Reporting by Huw Jones; Editing by Kevin Liffey Our Standards: The Thomson Reuters Trust Principles. MORE FROM REUTERS

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