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ECB wants greater say on clearing if London is cut off

·1 min read
FILE PHOTO: The headquarters of European Central Bank (ECB) in Frankfurt

FRANKFURT (Reuters) - The European Central Bank should have a greater say in supervising clearing houses in the European Union if more of that business moves to the bloc next year as a result of Brexit, ECB board member Fabio Panetta said on Wednesday.

The EU has given itself until June 2022 to decide whether to keep granting access to UK clearers, which have dominated this business for years, particularly in derivatives.

Panetta said current rules give too little power to EU institutions such as the ECB and the European Securities and Markets Authority (ESMA), arguing this would need to change if clearing is forced out of London.

"ESMA may recommend that the Commission deny the UK CCPs (central clearing counterparties) recognition to provide certain clearing services or activities in the EU if they pose excessive risks to financial stability," Panetta said.

"In this situation, it would be essential for EU authorities to have control over clearing activities that are systemic to the EU and critical to the transmission and conduct of monetary policy," Panetta said.

Stock trading has already largely moved from London to Paris or Amsterdam but business in less liquid, over-the-counter derivatives has been split more evenly among EU marketplaces and Wall Street.

In a bid to keep up with competitors, Britain plans to modernise its listing rules, with a view to attracting more high-growth company and so-called blank cheque flotations, Finance Minister Rishi Sunak said on Tuesday.

(Reporting By Francesco Canepa; editing by Jonathan Oatis)