LONDON, Jan 9 (Reuters) - Assessing if UK-based derivatives
clearing houses can access European Union investors after Brexit
can be done by June, but a final decision would hinge on broader
EU-UK trade negotiations, the bloc's markets watchdog said on
Thursday.
The London Stock Exchange's LCH unit clears the bulk of
euro-denominated swaps contracts that are widely used by
companies and banks across the EU to hedge against adverse moves
in interest rates.
The comments from the European Securities and Markets
Authority (ESMA) provide a clear sign that UK financial services
access to the EU post-Brexit will not be automatic, even if
Britain maintains the majority of EU rules.
ESMA will play a key role in deciding if LCH can continue
serving EU investors after Britain has left the bloc on January
31, and a "standstill" transition period that lasts until
December has ended.
For LCH to have access, the EU must decide if UK clearers
comply with rules that are "equivalent" to the bloc's regulation
in terms of protecting investors and financial stability.
Britain and the EU have agreed they would seek to complete
assessments for equivalence by the end of June.
"We think indeed that from a technical standpoint that that
is possible," ESMA Chair Steven Maijoor told reporters. "But
obviously this is much more around the political negotiations."
(Reporting by Huw Jones, editing by Sinead Cruise)