Brexit clearing costs negligible

The International Monetary Fund said that it foresaw only a modest increase in transaction costs if clearing and other financial activities are moved from the City of London to the European Union after Brexit.

The forecast, published in the fund’s annual report on the eurozone, contrasts with British claims that splitting European securities markets would increase costs and damage EU economies. Clearing of eurodenominated securities is dominated by London, but it could be relocated to the EU when Britain leaves the bloc. “Brexit is likely to transform the financial landscape, with some market activity migrating to EU-27,” the IMF said in its report. It said clearing and “securities transactions” could be moved from London, causing higher transaction costs during the transition. But “the impact is likely to be modest”, it said.