UK loss of clearing risks 100,000 jobs

WEB_0916_news digest_flagLondon Stock Exchange chief executive officer Xavier Rolet has warned thousands of jobs would be at risk if clearing leaves the UK as a result of the Brexit vote.

“We estimate, conservatively, that at a very minimum 100,000 jobs, in risk management, compliance, middle office, back-office support functions are implicated in supporting this business and clearly could be at risk,” Rolet said in an interview with Bloomberg.

“But the point is that there are very, very few financial centres around the world that could accommodate such a global business.”

The ECB has previously tussled with the City of London about the location of euro-clearing arguing it would be better done in the eurozone and observers expect this debate will be reignited following the UK’s vote to leave the EU.

Rolet comments come as a number of European politicians, including French President Francois Hollande, have stated that clearing businesses won’t be allowed in the UK after it leaves the Union.

The LSE chief executive said that New York would be the most likely beneficiary of business possibly leaving London, rather than main centres in Europe.

He says: “Is it possible that the whole thing could move? Of course it is.The London Stock Exchange Group via the London Clearing House operates a very successful clearing business and is currently licensed to operate in for example, in what I believe could be frankly the only logical alternative to London, if that came to pass, and that is the New York market.”

Rolet admits that moving clearinghouses would be complex, but it has been done before when the Intercontinental Exchange bought two derivative exchanges in London.

But Rolet argues it will be difficult to separate some interest-rate swaps, both from an economic and legal point of view.

This month, London School of Economics professor Sir Charles Bean joined a Brexit debate in the House of Lords with speakers arguing euro clearing houses are another financial services activity that would be severely hit once the UK leaves the European Union.

Bean said: “The issue of euro clearing, I wouldn’t say it’s likely we’ll lose it, I’d say it’s certain we’ll lose it.”