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EU Vows No-Deal Brexit Won’t Block Banks From London Clearing (Bloomberg)

UK EU Flags PABLO GARRIGOS/BLOOMBERG VIA GETTY

By Nikos Chrysoloras and Silla Brush
October 30, 2018, 11:25 AM GMT+3 Updated on October 30, 2018, 5:03 PM GMT+3

The European Union said it won’t allow a no-deal Brexit to cut the bloc’s banks off from London’s crucial financial infrastructure, which would put trillions of dollars of derivatives contracts at risk.

The European Commission, the EU’s executive arm, will ensure that financial firms don’t lose access to clearinghouses such as LCH Ltd., a unit of London Stock Exchange Group Plc, even if political negotiations break down and Britain quits the bloc abruptly next March, a commission spokesman said. Banks and U.K. regulators have been warning for months that EU action is needed to avert turmoil in financial markets.

The Brussels-based commission would only ensure clearing access on a temporary basis to “address financial stability risks arising from an exit without a deal,” commission spokesman Johannes Bahrke said by email on Tuesday. Any short-term fix would be based on the EU’s so-called equivalence rules, which can allow firms outside the bloc to provide services to the single market, he said.

Banks welcomed the commission’s commitment to maintain the cross-Channel clearing link. But acknowledging the potential threat isn’t enough, according to Simon Lewis, head of the Association for Financial Markets in Europe, a trade group whose members include BNP Paribas SA and Deutsche Bank AG.

Continued on https://www.bloomberg.com/news/articles/2018-10-30/eu-to-protect-access-to-u-k-clearing-in-no-deal-brexit-ft-says?srnd=brexit

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