Brussels proposes to increase EU banks’ access to UK clean houses

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Brussels has proposed extending EU banks’ access to UK derivatives for another three years in a victory for the City of London.

The European Commission on Wednesday announced that it has introduced a new decision called the “equivalent decision”, which will allow banks and other financial institutions in the bloc to use some of the most important market services in London until June 2028.

EU politicians wanted to win more money cleaning industry in euros since the Brexit vote in 2016 but it has accepted that its financial system is still dependent on the UK, which controls the world trade in the removal of products.

Cleaning up Houses reduce market risk by standing between two parties in a transaction.

London usually handles contracts said to be worth $3.5tn a day. It is a global hub for interest rate derivatives and Brent crude oil, and has canceled deals with LCH of the London Stock Exchange Group and the Intercontinental Exchange.

European manufacturers had pushed hard to extend the City’s permit, which expires on June 30 after three years. Member states have five days to object to the commission’s proposal to extend it until June 2028, but such an objection was unlikely, officials said.

The Commission has said that UK-based clean houses are key to its plans to build a single market for savings and investment.

“Two (clearing) houses in the UK have been identified by the European Securities and Markets Authority as being systematically important for the stability of EU funds,” said Olof Gill, a spokesman for the financial services, referring to LCH and ICE.

“The extension of the equivalence decision is necessary to avoid any risks to our financial stability in the short term, and to provide certainty and clarity to the participants of the EU financial market,” he added.

But he added that Brussels is committed to creating a competitive industry. Last year it adopted a revised European Market Structure Regulation that will oblige EU banks to hold “active accounts” in clearing houses of other EU-based products, even if users cross borders with each other .

The regulation “contains measures that will improve the attractiveness and competitiveness of the EU’s open markets. This will help reduce in the medium term the EU’s over-dependence on UK refineries,” Gill said. .

Pascal Kerneis, of the European Services Forum, which represents service companies trading internationally, welcomed the move.

“It will provide a clearer view to those operating in the EU financial markets in the medium term.

“This will also give a good political signal for ‘resetting’ the proper EU-UK relationship,” he said.

The two sides have started talks to improve trade relations. UK Chancellor Rachel Reeves met her EU counterparts in December and asked them to remove barriers to City firms. He said they could boost the growth of the EU by contributing international investment to the bloc.

Clearing is the only area of ​​financial services that has been given equal treatment since Brexit.