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AtW
23rd June 2017, 16:49
ECB bids for control over Euro clearing in threat to the City

The European Central Bank has stepped up the battle for control over London's lucrative euro-clearing market, asking for extra legal powers in its loudest call yet since the Brexit vote.

The ECB, which only emerged from a legal battle with Britain over where clearing houses should be based two years ago, has asked to change its statute in a move that would hand it "a significantly enhanced role" over the market, one of London's flagship businesses.

The UK won its case against the ECB to retain the bulk of the market in 2015, by arguing that it was part of the EU single market. The bank's fresh fight for more control comes in light of the EU referendum last June, with politicians and regulators on the continent arguing that EU derivatives should be cleared within the union.

If control is diluted away from London, it will be a major blow to the capital; the market can process trades with a value of more than €850bn (£746bn) per day, while the London Stock Exchange's LCH currently handles more than 90pc of cleared interest rate swaps globally.



The ECB said the change would give it "clear legal competence in the area of central clearing", meaning it will have extra powers to monitor any risks that might affect monetary policy or the stability of the euro.

If accepted by the European Parliament, the revised statute would say that the ECB and national central banks "may provide facilities, and the ECB may make regulations, to ensure efficient and sound clearing and payment systems, and clearing systems for financial instruments, within the Union and with other countries.”

The proposal follows a string of reforms published by the European Commission last week that called for Brussels to have the ability to force “systematically important” clearing houses to operate within the EU.

Bank of England Governor Mark Carney, keen for London to retain its status as a clearing hub, warned on Monday that such a move would be in "no one's economic interest" ( :laugh ) and could damage financial stability.

His views were not shared by ECB board member Benoît Cœuré, however, who on the same day said that the EU's clearing regime was "never designed to cope" with major clearing houses operating outside of the bloc.

A number of senior City executives have weighed into the debate over fears London could lose its crown as a financial centre, with the London Stock Exchange's chief executive Xavier Rolet telling The Sunday Telegraph earlier this month that the land grab could result in “complete chaos.”

Source: ECB bids for control over Euro clearing in threat to the City (http://www.telegraph.co.uk/business/2017/06/23/ecb-bids-control-euro-clearing-threat-city/)

EURO clearing will go, it's not the question of if, but when.

DimPrawn
23rd June 2017, 17:00
The proposal follows a string of reforms published by the European Commission last week that called for Brussels to have the ability to force “systematically important” clearing houses to operate within the EU.

So protectionism then. Fight fire with fire.

AtW
23rd June 2017, 17:10
So protectionism then. Fight fire with fire.

What you going to do - stop EU from clearing Sterling?

In case you failed to notice "free market" isn't exactly in favour at the moment, that's why big trade blocks appear, insane to be outside of one of them.

AtW
23rd June 2017, 17:12
So protectionism then. Fight fire with fire.

What do you call not agreeing with Freedom of Movement?

DimPrawn
23rd June 2017, 17:13
What do you call not agreeing with Freedom of Movement?

Common sense.

AtW
23rd June 2017, 17:14
Common sense.

And taking EURO clearing to run in a country that is subject to EU laws isn't?

DimPrawn
23rd June 2017, 17:18
And taking EURO clearing to run in a country that is subject to EU laws isn't?

Fine by me, we will insist by law all Sterling clearing and related instruments are cleared in London. Common sense 'innit?

AtW
23rd June 2017, 17:21
Fine by me, we will insist by law all Sterling clearing and related instruments are cleared in London. Common sense 'innit?

Sure, it would make sense, only problem is that EUR is the only real other reserve currency in the world next to USD, where as Sterling isn't.

northernladyuk
23rd June 2017, 17:39
So protectionism then. Fight fire with fire.

You are funny.

stek
23rd June 2017, 17:47
Fine by me, we will insist by law all Sterling clearing and related instruments are cleared in London. Common sense 'innit?

"Just you, and your schoolboy politics, and your idiotically conceited faith in your own importance."

Sir Nigel Irvine...

m0n1k3r
23rd June 2017, 18:53
Fine by me, we will insist by law all Sterling clearing and related instruments are cleared in London. Common sense 'innit?

Easy. Sterling clearing doesn't happen much anywhere else.

m0n1k3r
23rd June 2017, 18:56
ECB bids for control over Euro clearing in threat to the City

Nobody should to have any trouble with this. Those involved in USD clearing in the City are directly regulated by the USA, so why shouldn't LCH and others involved in euro clearing be directly regulated by the ECB? I believe they are already directly regulated by China for clearing Reminbi.

AtW
23rd June 2017, 18:59
Nobody should to have any trouble with this. Those involved in USD clearing in the City are directly regulated by the USA, so why shouldn't LCH and others involved in euro clearing be directly regulated by the ECB? I believe they are already directly regulated by China for clearing Reminbi.

Because UK is leaving EU, do you think if Hong Kong left China now it would get to clear bulk of Reminbi?

m0n1k3r
23rd June 2017, 19:03
Because UK is leaving EU, do you think if Hong Kong left China now it would get to clear bulk of Reminbi?

If China would amend its constitution so that it would be possible for a part of China to leave it lawfully, then yes.

AtW
23rd June 2017, 19:04
If China would amend its constitution so that it would be possible for a part of China to leave it lawfully, then yes.

:rollin:

Correct answer is NO, because no country or club would want to encourage members leaving it.

Lambert Simnel
24th June 2017, 16:14
... so why shouldn't LCH and others involved in euro clearing be directly regulated by the ECB?

Duh. Because we've taken back control, innit? So no way are we going to be subject to regulation by some unelected bunch of Euro technocrats.