“Brussels moves to preserve access to London clearing houses”, reports the Financial Times.
Brussels is to adopt emergency measures to preserve Europe’s access to crucial UK financial market infrastructure after the country’s post-Brexit transition period expires, the bloc’s regulation chief said on Thursday.
Valdis Dombrovskis, the European Commission’s executive vice-president in charge of financial policy, said Brussels would adopt “time-limited” access rights to make sure that European companies could still access UK-based clearing houses after the end of this year.
“This decision is being taken to address the possible risks to financial stability related to the specific area of derivatives clearing,” Mr Dombrovskis said. “However, we would encourage all market participants to prepare for all possible eventualities, as we have consistently called on them to do throughout this process.”
Mr Dombrovskis did not specify when the access rights would expire, but the move will provide short-term certainty for traders in the specific area of clearing while Brussels continues to discuss future relations with the UK.
To be frank I have only the vaguest idea what a clearing house does. It sounds worryingly like tidying. But whatever it is, for the EU to adopt “emergency measures to preserve Europe’s access to crucial UK financial market infrastructure” seems a distinct change from its previous policy, also mentioned in the article:
Brussels has repeatedly urged the financial sector and companies to adapt to the fact that Britain is leaving the single market; the EU also adopted legislation last year to make it easier to force clearing houses to relocate to the continent. But progress has been slower than the EU had hoped and investors have kept their business in the UK.
I am not surprised at the investors’ decision. I do not need to be an expert in decluttered differentials to be able to work out that if the EU felt the need to pass laws to make it easier to force investors to move their business out of the UK that means they would be better off staying put.