In the wake of the Brexit vote, the European Commission is considering supporting rule changes designed to give the ECB a remit over the location of the euro clearing business, the Financial Times reported Dec. 15.
The ECB in 2015 abandoned a policy requiring clearing houses handling euro-denominated securities to be located within the eurozone after a top European court rejected the measure. Britain had challenged the policy before the European Court of Justice, fearing it would damage London's status as a finance center.
In light of Brexit, a French central bank official called on the EU executive body to incorporate restrictions on euro clearing in legislative proposals due to be published in April 2017, the FT reported. U.K. Prime Minister Theresa May intends to trigger Article 50 by the end of March 2017.
Britain's court victory could be "reversed," with the location policy to be implemented through legislation, the FT added, citing a "senior policymaker."
Meanwhile, the U.K. House of Lords' EU Committee warned that relocating euro clearing to the eurozone because of Brexit poses a significant risk to the U.K. and the EU, Financial News reported Dec. 15.
"The question is whether any eurozone location could provide the same benefits to the wider economy as London and New York, and whether a politically driven attempt to repatriate euro clearing to the eurozone would invite retaliation by other noneurozone states, leading to the breakdown of the system of multicurrency clearing," the Lords report noted.