France is seeking to give European Union regulators a veto over how Britain supervises Euro-denominated trades in UK-based clearing houses after Brexit.
In June, a draft law was prepared by the European Commission setting out a proposal for joint supervision of ‘systemic’ clearing houses outside the EU which handle large volumes of derivatives and other contracts using the Euro. The LCH unit of the London Stock Exchange currently dominates the clearing of Euro-denominated derivatives.
Next week officials from the EU member states will meet to discuss the law. It is understood that Germany and France will seek to strengthen the rights of EU states up to and including a veto over decisions by non-EU authorities.
In particular, France is pushing for the European Commission and European Securities and Markets Authority to be able to impose additional requirements on non-EU clearing houses. Currently the European Central Bank alone is able to do this.
Clearing of trades in Euros has become a key issue in Brexit talks as London and Brussels try to find a way to structure the continent’s post-Brexit financial market.