City wins bat­tle with EU on clear­ing houses

The Daily Telegraph - Business - - Front Page - By Michael O’Dwyer

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.

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