Commenting on new proposals by the European Commission on the future regulation of third country clearing houses (CCPs), Miles Celic, Chief Executive Officer, TheCityUK, said,
Clearing is a central part of the infrastructure that makes London the leading international financial centre. It happens here because that is the most efficient and effective way to serve customers in Europe and the wider world.
While these proposals appear to fall short of the worst case scenario, the European Commission is holding back any real detail on when or how it might pull the trigger on a location policy.
Despite the Commission recognising the costs that a clearing location policy would pass on to European savers and businesses, it appears politically committed to exploring this further. This kind of currency nationalism is likely to lead to less competition, higher costs and market fragmentation. These are dangers that the US watchdogs and international bodies have also underlined and they should not be ignored.