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The UK government said last week that it will challenge the ECB over its recently-published “location policy”, which would require clearing houses dealing with euro-denominated products to move to eurozone countries. The lawsuit came to light after new rules outlined in the Markets in Financial Instruments Directive proposed to open the clearing industry to full competition.
Regulation experts say the scene is now set for what will be the second showdown between the UK and Germany, as they fight to protect their financial markets. Germany and the UK have already locked horns during talks on the European Market Infrastructure Regulation (EMIR), a key part of Europe’s derivatives reform. The UK pushed hard for greater competition but Germany campaigned successfully to preserve the status quo, which protects Eurex from competition. One Brussels policy adviser said: “The UK lawsuit seems to be a sign of frustration that no-one is listening to them on EMIR”.
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