Stripping City of euro-clearing would be '˜political'

Forcing London's multibillion-pound euro-clearing market to relocate to the eurozone after Brexit is illogical and would be a political 'punishment', claims the chief executive of lobby group TheCityUK.

Up to 83,000 jobs could be lost if euro-denominated clearing leaves London. Picture: Bertrand Langlois/AFP/Getty Images

Miles Celic said any attempt by the European Commission to strip the Square Mile of euro-clearing would come at a price for the European Union.

He said: “Absolutely nobody has come to us saying that this is a good idea, this would be purely political.

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“It looks like a punishment to the UK, and as with any punishment it comes with a price to pay for the punisher. The people who end up paying the price on the EU side are customers and clients.”

The Commission last month outlined proposals meant to tighten up and streamline the market in derivatives – financial contracts tied to the underlying value of a share, index, currency or bond. EU officials embarked on an “impact assessment”, the results of which will be revealed this month.

It brings London one step closer to losing its dominance over the euro-clearing market, which settles business and trade conducted in the EU currency.

Celic said: “To shift euro-clearing would be economically inefficient, would make very little sense and would have a complete illogicality to it.

“If you turn around and say you can no longer have euro-clearing in the UK, how can you logically allow New York, Hong Kong, Shanghai and Singapore to have it?”

An independent report conducted by EY for the London Stock Exchange last autumn said up to 83,000 clearing jobs could be lost over the next seven years if euro-denominated clearing leaves London.

Celic, speaking after Theresa May’s failure to secure a Commons majority last week resulted in a hung parliament and the Tories dependent on backing from Northern Ireland’s Democratic Unionist Party, said TheCityUK’s approach on Brexit talks remained unchanged.

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He said the group wants a bespoke deal for the financial services sector built on “mutual market access” as close as possible to the current set-up, a bridging period after the Article 50 process and mutual access to talent.

“We want a bespoke deal built on mutual market access as close as possible to what we’ve got at the moment and mutual regulatory recognition. That is about holding on to the passporting rights, or the rights that come with passporting.”