EU divisions stall plans to force trading out of London
Discord between the eurozone's three largest countries is stalling the European Central Bank's efforts to come up with a way to force euro clearing out of London and put it under its watch, three sources told Reuters.
Currently UK clearing houses, particularly the London Stock Exchange's LCH Clearnet, guarantee the vast majority of the trillions of euro worth of trades conducted every year and their location will likely be a point of contention in divorce talks between Britain and the European Union.
The ECB and the central banks of the eurozone's three largest countries - Germany, France and Italy - agree euro clearing needs to move to the eurozone after Brexit but they diverge on who should supervise it, the sources close to the matter said.
The ECB has effectively proposed taking over supervision of the largest clearing houses but national authorities want to have prerogative, as they do currently, the sources added.
"The question is who would supervise, the ECB or the national central banks," one of the sources said. "There is a risk now that we won't be able to agree on a proposal and the (European) Commission will decide for us."
The disagreement risks delaying the European Union's timetable for making a legislative proposal in June on euro clearing after Brexit. Alternatively it could force the European Commission to make a proposal without ECB input.
The ECB, Bundesbank, Banque de France and Bank of Italy all declined to comment.
The ECB, currently sits on "supervisory colleges" overseeing London-based clearing houses through regulation and agreements with the Bank of England. (Reuters)