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| ECB bids for more euro clearing oversight | ECB bids for more euro clearing oversight |
| (about 3 hours later) | |
| The European Central Bank has put forward a proposal to boost its oversight over euro clearing. | The European Central Bank has put forward a proposal to boost its oversight over euro clearing. |
| The legal amendment would give it a "significantly enhanced" role in regulating the lucrative market. | The legal amendment would give it a "significantly enhanced" role in regulating the lucrative market. |
| London currently processes most of the trade in this financial sector, providing thousands of jobs. | London currently processes most of the trade in this financial sector, providing thousands of jobs. |
| The ECB's proposal comes shortly after the European Commission published a draft law to give it the power to move euro clearing business out of London. | The ECB's proposal comes shortly after the European Commission published a draft law to give it the power to move euro clearing business out of London. |
| Clearing is where a third party organisation acts as a middleman for buyers and sellers of financial contracts tied to the underlying value of a share, index, currency or bond. | Clearing is where a third party organisation acts as a middleman for buyers and sellers of financial contracts tied to the underlying value of a share, index, currency or bond. |
| Trillions of euros are handled through clearing houses every year, mostly through London. | Trillions of euros are handled through clearing houses every year, mostly through London. |
| The ECB said the amendment would give it "clear legal competence" in the area of central clearing, which is currently dominated by London firms. | The ECB said the amendment would give it "clear legal competence" in the area of central clearing, which is currently dominated by London firms. |
| Under the proposal, the ECB and its national central banks would monitor risks that could affect monetary policy, the operation of payment systems and the stability of the euro. | Under the proposal, the ECB and its national central banks would monitor risks that could affect monetary policy, the operation of payment systems and the stability of the euro. |
| Daniel Hodson of the Financial Services Negotiation Forum told the BBC that at the moment the ECB did not have sovereignty over euro clearing in London, as its UK regulator - the Bank of England - is responsible. | |
| However, there are "substantial" arrangements in place with the ECB that are "very similar" to those in place with US regulators for dollar clearing, he said. | However, there are "substantial" arrangements in place with the ECB that are "very similar" to those in place with US regulators for dollar clearing, he said. |
| "There is no economic reason for changing this well-developed and thought out established framework, adapted as appropriate post-Brexit," he said. | "There is no economic reason for changing this well-developed and thought out established framework, adapted as appropriate post-Brexit," he said. |
| "There is a strong argument that to try to move substantial amounts of London based euro clearing business into the eurozone would actually create more systemic risk than it would offset," he added. | "There is a strong argument that to try to move substantial amounts of London based euro clearing business into the eurozone would actually create more systemic risk than it would offset," he added. |
| The move comes after the European Commission put forward reforms that would impose stricter supervision of the euro derivatives market and could force operators to leave London as a result of Brexit. | The move comes after the European Commission put forward reforms that would impose stricter supervision of the euro derivatives market and could force operators to leave London as a result of Brexit. |
| At the moment London is the world leader for clearing all types of currency-denominated derivatives including the euro. | At the moment London is the world leader for clearing all types of currency-denominated derivatives including the euro. |