| LONDON, March 9
LONDON, March 9 Britain could face limits on the
number of euro financial transactions it handles unless it
allows European Union supervision of clearing houses in London
after Brexit, EU lawmakers said on Thursday.
Britain is Europe's biggest financial centre, trading and
clearing a large number of euros and euro-denominated
transactions such as derivatives, supporting thousands of jobs.
After its departure from the EU, Brussels would have no
direct say over how risks to EU financial stability from such
trading is handled.
"This is about what is the amount of financial risks that
you allow somebody else outside the EU to manage. There are
limits to what you can allow," Olivier Guersent, a top official
at the European Commission, told the European Parliament's
economic affairs committee on Thursday.
He was responding to concerns from committee members about
how the bloc's system of "equivalence" will work after Britain
leaves the EU.
Equivalence refers to the EU granting market access for a
non-EU firm if it complies with rules similar to those in the
bloc, and Guersent expects banks based in Britain to apply for
The lawmakers, who will have a veto over a future EU trade
deal with Britain, said they had serious concerns about London
still dominating euro-denominated trading after Brexit.
Burkhard Balz, a centre-right German lawmaker, doubted that
equivalence offered enough guarantees to ensure "high quality"
supervision of euro clearing conducted outside the EU.
"We have serious concerns about the future of these
transactions once the Brexit is implemented, and current
legislation needs to be adjusted in order to ensure that
supervision of euro derivatives falls under the responsibility
of EU institutions," Balz said.
A German centre-left lawmaker, Jakob von Weizsaecker called
for a "sliding scale" of measures to stop financial stability
risks entering the bloc from outside, with "repatriation" of
trading activities as a last resort.
Equivalence was never designed for "systemically important
volumes" a Britain outside the EU would represent, another
The concerns echo comments from the European Central Bank,
whose previous attempt to force large swathes of
euro-denominated clearing to move from Britain to the euro zone,
Sabine Lautenschlaeger, a top ECB official said this month
that keeping euro clearing in London after Brexit would depend
on whether the new UK-EU trading terms kept the central bank
involved in supervision.
Steven Maijoor, chairman of the EU's European Securities and
Markets Authority, said there was a need to beef up checks of
whether non-EU regulators and financial firms continued to meet
Under the current system there were clear limits to how much
the EU could mitigate risks from euro clearing from outside the
bloc, Maijoor added.
(Reporting by Huw Jones; Editing by Mark Potter)