LONDON, Oct 17 (Reuters) - European Union plans to scrutinise clearing of euro denominated derivatives outside the bloc could fragment markets and cost EU customers 20 billion euros a year, London Stock Exchange Chief Executive Xavier Rolet said on Tuesday.
The LSE owns LCH in London, the dominant clearing house for interest rate swaps in Europe denominated in euros.
The EU plans to propose joint supervision of foreign clearing houses that serve the bloc’s customers. As a last resort, the clearing would have to move to inside the EU.
“The potential proposal to fragment and separate the clearing of euro denominated derivatives would lead to a deteriorating execution price of somewhere in the region of 20 billion euros in additional cost to EU based investors... per annum,” Rolet told a conference organised by EU securities watchdog ESMA.
Reporting by Huw Jones and Maya Nikolaeva