* Maijoor cautions London rivals not to undercut each others
* French regulator pushes for more clearing outside London
By Tom Sims and Andreas Kröner
FRANKFURT, April 20 A senior European regulator
on Thursday warned supervisors in financial centres on the
continent against undercutting each other to attract business
from London after Britain's decision to leave the European
Steven Maijoor, chairman of the European Securities and
Markets Authority (ESMA), said in a speech there were some
indications of "flexible national competition" as financial
centres in Europe seek London's financial business.
"That is not the right process," Maijoor said. "It
undermines the stability" of the remainder of the European
Union. "This has been recognised by ESMA."
The risk of such arbitrage has recently crept onto the radar
screens of politicians and regulators. Ireland has complained to
the European Commission it is being undercut by rival centres
competing to host financial firms looking for an EU base outside
Maijoor was speaking at a conference on clearing and
derivatives as debate rages about the future financial landscape
of Europe after Brexit.
Particularly intense debate has centred around a single big
prize - the possible relocation of euro-denominated clearing
operations from London to Paris or Frankfurt.
Some politicians and regulators believe Deutsche Boerse's
subsidiary Eurex Clearing, based in Frankfurt, and
LSE subsidiary Clearnet SA, based in Paris, are
especially well placed to take on additional clearing business.
Maijoor's comments applied to supervision across the board,
but also referred to euro denominated clearing.
He told Reuters: "it is fine when financial centres attract
business for being efficient, but it should not be on the basis
of regulatory or supervisory standards", when asked about the
risks of Paris and Frankfurt fighting for the clearing business.
He made those comments as Philippe Guillot, who heads the
market directorate at French regulator L'Autorité des Marchés
Financiers, said he favoured moving clearing from London.
"Business is getting more and more interconnected and more
and more electronic." he said. "London was the model of the very
centralized hub. Tomorrow you will have a much more
decentralized hub with people sprinkling their staff everywhere,
connected by systems."
(Editing by John O'Donnell and Mark Potter)