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Global financial industry urges EU to extend euro swaps clearing in London By Reuters

by Mike Robinson

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© Reuters. FILE PHOTO – The European Central Bank (ECB), presents the 50 Euro note to the bank at its headquarters in Frankfurt. This was July 5, 2016. REUTERS/Ralph Orlowski

LONDON (Reuters) – Global financial, investment fund and derivatives industry bodies have called on the European Union to extend permission for clearing houses in Britain to serve customers in the bloc to avoid a significant risk of market disruption.

The UK formally left the EU in December, and LCH, the London Stock Exchange’s clearing arm, cleared the majority of euro-based swaps. Temporary permission was granted to allow LCH to serve customers until June 2019.

Brussels is looking at how this activity can be transferred to the bloc, where it can be closely supervised.

Industry associations urged Mairead McGuinness to grant an open-ended or extended temporary permission to ensure market certainty.

The LSE must give three months notice to EU customers to move euro clearing out of Britain if clearing permission isn’t extended by June 2022.

The letter stated that the EU market participants would like to be informed by the Commission of their intention to do so as quickly as possible, before March 2022 in order to resolve the uncertainty facing the Joint Associations’ EU clearing members. This has already adversely affected their clearing business.

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