City wins battle with EU on clearing houses
BRUSSELS will allow firms on the Continent to continue using London’s vital clearing services after the Brexit transition ends in a victory for the City.
Valdis Dombrovskis, the European Commission vice-president, said the bloc would introduce “time-limited” provisions from January next year to ensure firms were still able to access the capital’s clearing houses, middlemen that handle trillions of pounds of trades each year. Brussels did not confirm how long the arrangement would last. It will kick in if the UK and EU fail to reach a Brexit deal.
A power grab was launched shortly after the Brexit vote to try to force continental firms to clear trades through hubs within the bloc, but this stalled when it became clear no other financial centre could handle the volume of activity done in the City. Clearing houses such as LCH, ICE Clear Europe and LME Clear perform a vital role in greasing the wheels of international finance.
The EU’s decision to guarantee firms access to London clearing houses will not necessarily be replicated in other financial services industries, where ties could still be cut from 2021 without a deal.