The European Union will take months for deciding if banks can continue clearing derivatives in London. The EU’s financial services chief said that in a sign of how Brussels is keeping up pressure to shift business to Frankfurt. A European Commission working group looked at how trillions of euros in interest rate swaps could be shifted from London to give EU regulators a direct say over the activity.
EU financial services commissioner Mairead McGuinness told a Bruegel think tank event that they will in the coming months, look again at the time horizon there. But they have made no decisions. Industry officials who took part in the meetings says that the EU executive appeared surprised by broad opposition to mandatory migration. But it was up to the customers. Since Britain fully left the EU, they have temporary EU permission to keep serving EU clients until June 2022.
LCH owned by London Stock Exchange, needs to serve three-months’ notice to EU customers. London is still Europe’s biggest financial centre. The EU’s securities watchdog ESMA is expected to reach conclusions by this year end, regarding whether LCH or other UK clearers are so systemic that EU business should be shifted to the bloc. McGuinness said that everything is fine today, but when things go wrong they could not guarantee that Europe would be on the same level as the UK if there is a problem.
