EU to unveil banking rules that could hurt London

The European Union is expected to unveil new rules today that could force a huge slice of London’s banking business to leave the UK after Brexit.

The draft law, to be unveiled by European Commission vice-president Valdis Dombrovskis, could deny post-Brexit London the right to host financial market ‘clearing houses’ that deal with trillions of euros every year. 

If confirmed, the rules would be seen as a hostile move against Britain ahead of formal Brexit negotiations, which are due to get underway next Monday.

Britain has jealously guarded dominance of the clearing house sector in Europe and won an EU court decision in 2015 against the European Central Bank in order to keep hosting the euro deals.

Amid the heated lobbying, the EU last month said it was exploring several options on the issue including the possibility that Britain maintain euro-clearing, while accepting strict Brussels oversight.

The London Stock Exchange has bitterly objected to relocation in a sign that any forced move out of the UK could be highly damaging to its business.

In a letter to Dombrovskis, the International Swaps and Derivatives Association said any move to an EU country would drive up costs for the financial sector.

A relocation could “heighten financial stability concerns”, the powerful lobby added, with traders and banks struggling to find new homes for their operations.

Last week the Futures Industry Association, a US and UK-linked lobby, warned that forced relocation to the EU would require a near doubling of the $83bn finance companies set aside in case of contract defaults.

Source link

About NBN Editorial Team 60670 Articles
NBN's team of Field Producers, Editorial Staff & Contributors create & produce original content for distribution. NBN is located in Beautiful Tampa Bay with Mobile Units Serving Miami, Orlando and Fort Myers.