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Wed Nov 25, 2020, 08:04 AM

EU derivatives decision leaves London in the lurch

LONDON (Reuters) - London’s dominance of the multi-billion dollar derivatives market is at risk after a European regulator said on Wednesday banks in the European Union will have to use trading platforms within the bloc once Britain fully leaves the EU on Dec. 31.

The City of London’s unfettered access to the European Union, its biggest customer, ends when Brexit transition arrangements expire and Brussels wants trading in euro-denominated derivatives to remain within its jurisdiction or in a country with “equivalent” standards to the bloc.

The Paris-based European Securities and Markets Authority (ESMA) on Wednesday confirmed that EU investors would have to use a swaps platform inside the bloc, or based in a non-EU country that has already been granted “equivalence” or permission, such as the United States from Jan 1.

This will mean that branches of EU banks in London face conflicting EU and British requirements on where to trade derivatives.

Read more: https://www.reuters.com/article/us-britain-eu-derivatives/eu-derivatives-decision-leaves-london-in-the-lurch-idUSKBN2850SZ

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