The European Commission is reportedly preparing legislation to impose control on London’s euro-clearing market in a move that supports more “centralised supervision” of clearing houses that are of systemic importance to the European Union.
According to the Financial Times, a draft commission policy communication, which is expected to be published on Thursday, says Brexit will have a “significant impact” on oversight arrangements because the UK will play a substantial role in capital markets beyond the EU’s regime.
The FT says London processes up to three-quarters of global euro-denominated derivatives and clears approximately €850bn (£720bn) per day.
The commission’s proposals could force UK operators to either relocate or be subject to oversight from European authorities.
The FT says the legislative proposals could be issued as early as June.