Financial Times: Brexit anxiety mounts for UK clearing houses and EU banks

10 December 2018

European banks face a crucial two-week period before finding out if they will receive formal notice to begin closing £45tn of derivatives positions in UK clearing houses, further raising their anxiety about access to London’s capital markets post-Brexit.

LCH, ICE Clear Europe and LME Clear, the London clearing houses, are weighing issuing the formal notices to EU members in the week before Christmas because of the uncertainty over the legal status of the contracts after March, according to three people involved in the process.

However, senior executives at clearing houses are sensitive to the symbolism of formal notification at a delicate point of negotiations between the UK and EU, the sources said. The clearing houses declined to comment.

Their hesitation underscores regulators’ concerns around clearing, which sits at the centre of global financial stability. The houses stand between parties in thousands of securities and derivatives deals and manage the risk to the market if one side defaults on payment. [...]

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