The plan by Brussels to take over London’s lucrative clearing markets won’t deny European banks the Square Mile. This is what the head of the London Stock Exchange Group, LSEG has stated.
David Schwimmer stated that “we are well beyond the point” when there was a threat of LCH, LSEG’s clearing house, not being able to access European lenders despite attempts by the EU forcing its banks to move clearing business away from the City of London.
Since the 2008 financial crises, clearing houses have played a crucial role in the financial system by acting as intermediaries for derivatives transactions between banks.
Mr Schwimmer said to Bloomberg TV that we are in 2023, and the discussion has been ongoing for years. I don’t think there’s any risk that LCH will be shut down because of its lack of access to Europe.
“I believe that the different stakeholders in the EU recognize how important LCH to their institutions, banks, and asset owners.
There may be a requirement that entities in the EU have an active clearinghouse account, but it is unlikely that access to LCH will be shut down.
The European Commission announced controversial plans last year to punish European banks who failed to shift lucrative clearing activities from London to the Continent.
Mairead McGuinness is the European Commissioner for Financial Services. She has previously criticised the “excessive dependency” of the bloc on London’s €660 billion (£568 trillion trillion) clearing markets.
Last year, the Irish commissioner raised eyebrows when she said that the EU’s dependence on the City of London is a vulnerability comparable to its dependency on Russian oil.
A temporary post Brexit agreement allows EU banks and money managers the ability to clear trades at London until June 2025.
LSEG announced mixed results on Thursday for the first half of the year. The bourse reported a slowing in the growth of subscription revenues.
LSEG acquired Refinitiv, a data and information company in 2021. Previously the group made its revenues primarily from share trading and listing.
The company’s shares fell up to 6pc before recovering some of the losses and closing 1.5pc below Thursday’s close.