EU Targets Derivative-Clearing Giants With Relocation Threat
- Proposal could impact London-based firms as Brexit talks loom
- European Commission unveils overhaul of market infrastructure
A pedestrian passes by as skyscrapers including Tower 42, the Heron Tower, the Leadenhall building, also known as the 'Cheesegrater,' 30 St Mary Axe, also known as 'the Gherkin,' and 20 Fenchurch Street, also known as the 'Walkie-Talkie,' stand beyond, in London, U.K., on Tuesday, April 18, 2017. Global banks have started arranging for some British-based operations to move to new or expanded offices inside the EU after British Prime Minister Theresa May triggered discussions to leave the trading bloc.
Photographer: Simon Dawson/BloombergThe European Union could force the biggest foreign derivatives-clearing firms to set up shop in the bloc if they want to continue doing business there, as policy makers brace for the changes Brexit will bring to an industry in which London plays a key global role.
The European Commission on Tuesday proposed a two-tier system for non-EU clearinghouses. Smaller firms would carry on operating under existing rules, while those deemed systemically important to European financial markets would face stricter scrutiny and, ultimately, could be forced to move clearing of EU derivatives inside the bloc.