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The European Union is set to give finance firms access to U.K. derivatives clearinghouses through the end of June 2022, removing the most pressing concern for the industry ahead of a potentially chaotic end to the Brexit transition period.
The European Commission, the EU’s executive arm, proposed to national governments that British regulations should be seen as sufficient during that period, allowing companies in the bloc to access crucial infrastructure in the country, according to a draft of the decision that was seen by Bloomberg.
Officials in Brussels said in July they will allow European traders to access U.K. clearinghouses, which have a dominant role in settling trillions of dollars in contracts. The London Stock Exchange Group Plc’s clearinghouse is the world’s primary place for settling swaps in dollars, pounds and euros.
In the document, the commission said it expects firms “to develop a clear process to reduce their exposures and reliance” on U.K.-based clearinghouses. It also said it can “amend, suspend, review or revoke” the decision to grant access at any time, “in particular where developments occur in a third country which affect the equivalence determination.”