The European Parliament has voted to strengthen plans requiring U.K. clearing houses dealing with large amounts of euro-denominated transactions to adapt EU rules and accept European supervision after Britain leaves the bloc, the Financial Times reported.
The parliament also wants to grant European regulators more powers to rule on the conduct and operations of "systemic" firms in "exceptional circumstances," including the type of collateral to be held in a clearing house, according to the report. Such remit would give the European Securities and Markets Authority the remit to decide if the volume of derivatives clearing outside the EU is so significant to its financial system that the business must be done within the bloc, the FT wrote.
The plans could greatly impact the operations of London Stock Exchange Group PLC unit LCH Group Holdings Ltd., which handles roughly 90% of euro-clearing business, according to the report.
The vote paves the way for the parliament and national governments to start discussions on a final version of the EU rules on euro clearing, the FT noted.
In February, reports emerged that the EU could push euro-denominated clearing houses in London to move to other member states during the two-year transition period after Brexit in March 2019. LCH CEO Daniel Maguire said in October 2017 that the firm could choose New York as its post-Brexit base.
Stuart Williams, president of ICE Futures Europe, said in April that the EU risks making future financial crises worse if it insists that U.K. financial regulators follow its rules for vital functions such as clearing after Brexit.