By Huw Jones
LONDON, Sept 2(Reuters) - Detailed analysis is needed before
the European Union can decide on long-term access for the London
Stock Exchange to clear euro denominated derivatives for
customers in the bloc, a European Central Bank official said on
Wednesday.
The LSE dominates euro derivatives clearing and EU
policymakers have called for the activity to be relocated to the
bloc given that Britain will no longer have to comply with EU
rules after Dec. 31 when a post-Brexit transition period ends.
The EU's executive, the European Commission, has said it
will grant Britain "time limited" clearing access from January
to allow the bloc to build up its own euro clearing capacity and
avoid disrupting markets.
Klaus Loeber, a senior supervisor at the ECB, was being
quizzed by members of the European Parliament on Wednesday about
his appointment as chair of a new EU clearing committee that
will advise the European Commission and directly supervise
foreign clearing houses serving the bloc.
There was a need to look closely at longer term
implications by taking into account the ability of EU firms to
access global markets without undue costs and the role of
sovereignty in EU markets, Loeber said.
"This requires analysis, very concretely of specific
products, services, to see where there is a significant interest
on the side of the EU to have a more direct influence."
The LSE has already moved clearing of euro repurchase
agreement or repo contracts from London to its Paris subsidiary,
but the clearing of over 90% of euro interest rate swaps remains
in London.
The EU has found itself in the "slightly unusual position"
of having a major financial centre close by that is outside the
euro zone and, from January, outside the direct influence of EU
law, Loeber said.
"What is key for me is that there is clear analysis for the
stability implications, both in regards to relocation and
non-relocation, and to balance this with a clear strategy and a
clearly communicated strategy," Loeber said.
(Reporting by Huw Jones, editing by Carmel Crimmins)