"The City of London is a global financial centre we will always want to use because it is next door, it's convenient. The issue here is one of balance," John Berrigan, head of the commission's financial services unit, told an event held by Brussels think tank CEPS.
European Union won't suddenly pull up the "drawbridge" on Britain's
financial services sector, and reducing reliance on the City of London
for euro clearing could take years, a top European Commission official
said on Tuesday.
EU executive said last week that EU market participants could continue
clearing euro denominated derivatives in London beyond June 2022, when
permission was set to expire. read more
extra period would allow time to expand the bloc's capacity in
clearing, a core part of the financial system's plumbing which has
become politicised due to Brexit given that the London Stock Exchange
clears about 90% of euro denominated swaps.
City of London is a global financial centre we will always want to use
because it is next door, it's convenient. The issue here is one of
balance," John Berrigan, head of the commission's financial services
unit, told an event held by Brussels think tank CEPS.
"That balance, we will have to work on in the next few years," Berrigan said.
say that forcing a shift in euro derivatives clearing from the London
Stock Exchange to Deutsche Boerse in Frankfurt would be costly and
deciding on the length of Britain's market access extension, the EU is
waiting for a report from the bloc's markets watchdog ESMA, due in
coming weeks. The ESMA report is expected to reach conclusions by year
end on whether UK clearers are so systemic that EU business should be
shifted to the bloc.
commission will then see what measures might be required to move
clearing and how long would be needed to implement them while minimising
costs and stability risks, Berrigan said.
you make it open ended, the risk is you will never finish," Berrigan
said. "It's not drawing on protectionism or drawing on drawbridges, it's
about finding the right balance in terms of our relationship, in terms
of our alliances."
Wendt, a member of ESMA's clearing supervisory committee, said the
report looks at the effect of cutting off EU market participants from
clearers in London.
are also benefits and they relate to the ability of EU supervisors, EU
authorities especially in times of crisis, to access information and to
be able to intervene effectively," Wendt said.
The EU will have to build up "best in class" clearing capacity that is attractive and competitive, Berrigan said.
© Thomson Reuters
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