LONDON (Reuters) – The European Union will have a “Plan B” that relocates clearing of euro-denominated derivatives from London to the bloc if it decides against long-term access for Britain, a top EU regulator said on Wednesday.
The London Stock Exchange’s
LCH unit has been given EU permission, known as equivalence, to continue clearing derivatives for customers in the bloc for 18 months after Dec. 31, when Britain’s Brexit transition arrangements expire. ICE
and the London Metal Exchange has similar permission.
LCH clears the vast majority of euro-denominated swaps, an activity core to London’s role as a global financial centre and which EU has long wanted to be in the bloc.
Long-term EU access for UK clearers would partly hinge on good relations between its regulator, the European Securites and Markets Authority (ESMA), and the Bank of England, the home regulator for LCH.
“Equivalence assumes good cooperation and we work