The European Commission has said it will announce proposals on the UK’s euro clearing business by this summer.
Editor’s Remarks: The EU wants new legislation to oversee clearing houses that handle significant volumes of euro-denominated derivatives. Not least given the announcement’s timing, it’s no secret that the City of London, a key part of the EU’s financial markets, is the main target here. Around 75% of the clearing is done in Britain – most of it by the LCH, which clears about €850bn notionally every day in euro trades. EU regulators want more foresight to be able to step in when things get rough, meaning either more direct oversight of City clearing or forcing it all to take place within the EU. The Commission said it would not jump to conclusions, though the political symbolism of the issue would make it unsurprising if the latter option were demanded.
What to watch: Philip Hammond, London Stock Exchange & London Clearing House, Jeroen Dijsselbloem, Valdis Dombrovskis