Although there have been fears the City may lose its place as the dominant European financial market, commentator Ben Wright suggests the UK remains the destination for clearing houses. A clearing house is an intermediary between a buyer and a seller in a financial market. The clearing house validates the transaction between the two and makes sure both honour their obligations.<\/p>\n
While Brussels may want to shift influence to the EU, the bloc realises many firms want to remain in the UK.<\/p>\n
LCH is the clearing house owned by the London Stock Exchange.<\/p>\n
It manages roughly 90 percent of all euro-denominated derivatives, Mr Wright suggests in his column for The Telegraph, pointing to \"a notional value of something like $100 trillion\".<\/p>\n
Mr Wright notes: \"If the ECB were to decree that all euro-denominated derivatives had to be cleared in the eurozone, it would severely diminish the EUs reputation as an open economy and the euro as a global currency.<\/p>\n
\"Its worth remembering that some 90pc of dollar-denominated trades are also cleared in London and the US is fine with that.\"<\/p>\n
Mr Wright also quoted William Wright from think tank New Financial, who said: \"Clearing is a constant reminder to Brussels that London is where a lot of international firms choose to do lots of their business while the EU is a location where they have to do some of their business.<\/p>\n
Of course, if the EU regulators were to force firms to clear their euro-denominated trades in the eurozone it would only further underline that point.<\/p>\n
Following Brexit, the EU did not grant the UK equivalence meaning firms must apply two sets of rules to trade.<\/p>\n
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\"The extension of equivalence should be long enough to allow us to revise the EU supervisory system for CCPs.<\/p>\n
\"This proposed way forward strikes a balance between safeguarding financial stability in the short term which requires taking an equivalence decision to avoid a cliff-edge for EU market participants and safeguarding financial stability in the medium term which requires us to reduce this risky over-reliance on a third country.<\/p>\n
Away from financial services, the EU and UK will hold talks over the Northern Ireland protocol next week.<\/p>\n
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More:<\/p>\n
EU bottles it! Brussels 'wakes up' to risk of raiding City of London in finance war - Daily Express<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" Although there have been fears the City may lose its place as the dominant European financial market, commentator Ben Wright suggests the UK remains the destination for clearing houses. A clearing house is an intermediary between a buyer and a seller in a financial market Continue reading