Warning to Brussels over stripping City of euro clearing

The chief executive of the London Stock Exchange (Other OTC: LDNXF - news) group has warned that moving euro clearing away from the capital after Brexit could backfire creating a €100bn extra bill for investors.

Xavier Rolet made the remarks in a newspaper article as European officials consider changes which might threaten the City's role at the heart of the multi-trillion system underpinning global finance.

He also argued that if business left London as a result it would go to financial centres of a similar scale such as New York - not Paris or Frankfurt.

Clearing forms the "plumbing" behind the world financial system - ensuring millions of trades are settled in a "safe, transparent, and highly regulated manner", Mr Rolet wrote in The Times.

Insisting that euro-denominated transactions can be cleared only within the eurozone would increase costs for European companies and fragment global markets, he argued.

London clears 18 major currencies resulting in "multi-currency netting efficiencies"

Stripping out euro clearing would increase costs by €100bn over five years, Mr Rolet said.

"If business left it would go somewhere with the scale to offer these efficiencies like New York, not Paris or Frankfurt," he said.

"If Europe insists on trying to implement an artificial, inefficient location policy, it will only hurt the European capital markets and real economy.

"The rest of the global market will carry on."

The European Commission confirmed earlier this month that it was looking at whether clearing for euro-denominated derivatives - now mostly done in the UK - would need to relocate to the eurozone.

EU officials will report back in June.

An independent report by EY last autumn said up to 83,000 clearing jobs could be lost over the next seven years if euro-denominated clearing leaves London.