Debate on EU clearing after Brexit is warming up

France wants regulators from European Union (EU) to be able to impose veto to the way, which Britain regulates the Euro-denominated clearing in the country after Brexit. This is an indication of the escalation of the efforts of France, the European Central Bank (ECB), as well as other countries and institutions to be crucial for Euro-denominated clearing after the UK leaves the bloc in March 2019.
LCH, a division of the London Stock Exchange, currently dominates the clearing of derivatives in EUR.
The Clearing House has become a battlefield between London and Brussels, as both sides are blocked in divorce talks that will shape the European financial market along with its tax revenues and hundreds of thousands of jobs.
The European Commission (EC) proposed a bill in June setting out a system for joint oversight of "system" clearing houses outside the bloc that handle large quantities of derivatives and other contracts traded in EUR. The Euro clearing will have to move from London to the EU if joint supervision is considered insufficient for Brussels.
The EU politicians say a third country should have a say on this issue to ensure financial stability in the Eurozone in times of crisis.
Officials from the European Union countries will meet next week to begin the process of approving the bill. Germany and France want tougher measures than the one proposed so far.
Each EU country is asked to express its views on the law. France has asked the ECB to be able to impose additional requirements on non-EU clearing houses and to have the right to veto, if necessary, for certain decisions taken by non-EU authorities if these decisions are contrary to the interests of the bank.
Germany and Austria, oppose the granting of more powers to Paris-based financial regulators at the expense of national regulators but supports giving the ECB new powers to "impose additional requirements on clearing houses in third countries".
The next week's meeting will begin by discussing the ECB's proposal to amend one of its founding articles to enable the central bank to regulate "efficient and robust clearing and payment systems" across the EU.
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