Stripping City of euro-clearing would be ‘political’, claims trade lobby group

● Thecityuk chief executive says move would be counter-productive for EU

Forcing London’s multi‑bil‑ lion pound euro‑clearing mar‑ ket to relocate to the eurozone after Brexit is illogical and would be a political “punish‑ ment”, claims the chief execu‑ tive of lobby group Thecityuk.

Miles Celic said any attempt by the European Commission (EC) to strip the Square Mile of euro clearing would come at a price for the European Union (EU).

He said: “Absolutely nobody has come to us saying that this is a good idea, this would be purely political.

“It looks like a punishment to the UK, and as with any pun‑ ishment it comes with a price to pay for the punisher. The people who end up paying the price on the EU side are cus‑ tomers and clients.”

The Commission last month outlined proposals meant to tighten up and streamline the market in derivatives – fiancial contracts tied to the underly‑ing value of a share, index, currency or bond. EU offi‑ cials embarked on an “impact assessment”, the results of which will be revealed this month.

It brings London one step closer to losing its dominance over the euro clearing mar‑ ket, which settles business and trade conducted in the EU cur‑ rency.

Celic said: “To shift euro clearing would be economi‑ cally inefficient, would make very little sense and would have a complete illogicality to it.

“If you turn around and say you can no longer have euro clearing in the UK, how can you logically allow New York, Hong Kong, Shanghai and Sin‑ gapore to have it?”

An independent report con‑ ducted by EY for the London Stock Exchange last autumn said up to 83,000 clearing jobs could be lost over the next sev‑ en years if euro‑denominated clearing leaves London.

Celic, speaking after There‑ sa May’s failure to secure a Commons majority last week resulted in a hung parlia‑ ment and the Tories depend‑ ent on backing from North‑ ern Ireland’s Democratic Unionist Party, said Thecity‑ UK’S approach on Brexit talks remained unchanged. He said the group wants a bespoke deal for the financial services sector built on “mutual mar‑ ket access” as close as possible to the current set‑up, a bridg‑ ing period after the Article 50 process and mutual access to talent.

“We want a bespoke deal built on mutual market access as close as possible to what we’ve got at the moment and mutual regulatory recogni‑ tion.

“That is about holding on to the passporting rights, or the rights that come with pass‑ porting.”