The European Commission (EC) is preparing legislation to impose control on London’s euro-clearing market, according to reports.
The proposals – described as a “power grab” by Brussels – would result in increased European oversight of the UK capital’s €850bn (£720bn) per day business in a move that supports more “centralised supervision” of clearing houses that have systemic importance by providing “critical capital market functions” to the European Union (EU), according to the Financial Times.
The EC’s legislative proposals are likely to be issued as early as next month, the FT reports, and will put pressure on UK businesses to relocate or submit to regulation from Europe.
Germany and France, the leading members of the 28-state EU, have previously suggested that the UK vote for Brexit will curb London’s dominance in euro-clearing, and now it appears the bloc is moving ahead with plans to impose restrictions on UK firms. The UK’s departure from the EU will have a “significant impact” on oversight as post-Brexit Britain will have a substantial power in the markets but be outside the EU’s regulatory reach.
For non-EU firms, there will be arrangements based on “objective criteria” that ensure any external clearing markets playing a significant role in the EU’s financial markets are subjected to EU oversight. “This includes, where necessary, direct supervision at EU level [and/or] location requirements,” adds the FT.
ExxonMobil is legally challenging a $2m fine from the US Treasury for allegedly violating sanctions against Russia in 2014 while US Secretary of State Rex Tillerson was still overseeing the company.
Morgan Stanley is moving staff to Frankfurt in time for the March 2019 Brexit deadline.
The US bank, which already has 350 employees based in the city, will transfer some trading activities currently undertaken in London and create a further 150 to 250 jobs according to reports.
BNP Paribas is the latest in a long line of financial service companies to be penalised for misconduct during the financial crisis on both sides of the Atlantic.