The Treasury has filed a second lawsuit against the ECB attempting to block its "location policy" that would see clearing houses dealing in euro-denominated instruments forced to move within the eurozone.
An initial lawsuit was filed in autumn challenging the EU's proposals to ban clearing houses outside of the euro area from handling more then 5pc of the trade in any one euro-denominated instrument. As London handles 40pc of global over-the-counter derivatives trades and 75pc of Europe's, the ban would be highly damaging for the City. The new rules would also limit clearing of euro-denominated trades outside the eurozone to a maximum of €5m (£4.2m).
A second legal case was lodged this year. "There is no change to our policy, approach or position in any way – the government continues to believe the ECB's proposed 'location policy' contravenes European law and fundamental single market principles by preventing the clearing of some financial products outside the euro area," a Treasury spokesman said.
The battle over clearing houses comes at a particularly sensitive time. LCH.Clearnet, one of the largest operators in London, is in talks with the London Stock Exchange that could see the LSE take a 51pc stake. The deal would value the company at around £1bn. The second suit was filed with the European Court of Justice after the ECB signalled its intent to pursue the location policy. (AtW's comment: I hope this one isn't based on human rights law that supposedly should guarantee right of City firms to profit!)
The legal case is part of a wider project to reform the clearing market from a national to a trans-national industry. It dates back to 2001 when the ECB published its intentions in a paper on effective risk management.
Source: Ministers step up fight to protect City from EU trading shake-up - Telegraph
AtW's comment: Now this was really coming - USA got control over clearing houses because ultimately USD is their currency, same can be said about any country with a currency in the world but yet for some reason UK which is outside of Euro zone thinks it should be different. Essentially this means that whoever controls the currency decides what the rules are - this is why transaction tax enacted in Eurozone will still hit the City - unless they totally stop trading euro stuff, which is just as well for the rest of Europe - less spekulation and more of normal investing.
An initial lawsuit was filed in autumn challenging the EU's proposals to ban clearing houses outside of the euro area from handling more then 5pc of the trade in any one euro-denominated instrument. As London handles 40pc of global over-the-counter derivatives trades and 75pc of Europe's, the ban would be highly damaging for the City. The new rules would also limit clearing of euro-denominated trades outside the eurozone to a maximum of €5m (£4.2m).
A second legal case was lodged this year. "There is no change to our policy, approach or position in any way – the government continues to believe the ECB's proposed 'location policy' contravenes European law and fundamental single market principles by preventing the clearing of some financial products outside the euro area," a Treasury spokesman said.
The battle over clearing houses comes at a particularly sensitive time. LCH.Clearnet, one of the largest operators in London, is in talks with the London Stock Exchange that could see the LSE take a 51pc stake. The deal would value the company at around £1bn. The second suit was filed with the European Court of Justice after the ECB signalled its intent to pursue the location policy. (AtW's comment: I hope this one isn't based on human rights law that supposedly should guarantee right of City firms to profit!)
The legal case is part of a wider project to reform the clearing market from a national to a trans-national industry. It dates back to 2001 when the ECB published its intentions in a paper on effective risk management.
Source: Ministers step up fight to protect City from EU trading shake-up - Telegraph
AtW's comment: Now this was really coming - USA got control over clearing houses because ultimately USD is their currency, same can be said about any country with a currency in the world but yet for some reason UK which is outside of Euro zone thinks it should be different. Essentially this means that whoever controls the currency decides what the rules are - this is why transaction tax enacted in Eurozone will still hit the City - unless they totally stop trading euro stuff, which is just as well for the rest of Europe - less spekulation and more of normal investing.
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