# Britain says EU will struggle to shift euro clearing from London
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-04-26
Category: TRADING
Category URL: https://financedigest.com/category/trading
Meta Title: EU Struggles to Replace London for Derivatives Clearing
Meta Description: Learn about the challenges EU faces in replacing London for euro clearing, as discussed by UK financial services minister John Glen. Stay updated.
URL: https://financedigest.com/britain-says-eu-will-struggle-to-shift-euro-clearing-from-londonhtml

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By Huw Jones

LONDON (Reuters) – Britain’s financial services minister said on Tuesday that the European Union would find it hard to replace London for clearing trillions of euros in derivatives, and that the limited shift in activity so far was not gathering pace.

After Britain left the bloc, Brussels said it wants to build up euro clearing capacity inside the EU to end heavy reliance on the London Stock Exchange’s LCH unit, which clears most euro interest rate swaps.

Brussels is allowing EU banks to use [London for clearing](https://www.financedigest.com/analysis-frankfurt-stirs-up-euro-clearing-battle-with-london.html "Analysis-Frankfurt ‘STIRs’ up euro clearing battle with London") until June 2025, and in the meantime will introduce incentives for banks to shift more activity to Frankfurt, and potential penalities for those who don’t.

It’s quite challenging to build up that infrastructure, but that is a matter for them,” UK financial services minister John Glen told the [House of Lords European Affairs Committee](https://www.financedigest.com/us-house-committee-chair-concerned-by-tesla-deals-in-china.html "US House committee chair ‘concerned’ by Tesla deals in China").

Small amounts of clearing have [moved from London but not enough to concern Britain](https://www.financedigest.com/protecting-the-unbanked-as-we-move-to-a-cashless-britain.html "Protecting the unbanked as we move to a cashless Britain"), Glen said.

“I don’t think it’s part of a trend,” he added.

Although [Brexit largely cut off Britain’s](https://www.financedigest.com/explainer-how-britain-is-exploiting-brexit-to-reform-finance.html "Explainer-How Britain is exploiting Brexit to reform finance?") financial sector from the bloc, Glen said the sector has grown and is resilient, with around 7,000 jobs leaving London for the EU, not the haemorrhage initially predicted.

With the exception of clearing, the EU has not granted [access for other financial](https://www.financedigest.com/kings-secure-technologies-adopts-agile-flexible-cloud-reporting-access-granular-real-time-financial-information.html "Kings Secure Technologies Adopts Agile and Flexible Cloud Reporting for Access to ‘Granular Real-time Financial Information’") activities from Britain, unlike for the United States and Singapore.

I am not waiting for that decision,” Glen said, adding his focus was on keeping London a competitive and well-regulated [place for clearing](https://www.financedigest.com/future-cheque-clearing-model-places-emphasis-on-speed-and-innovation.html "FUTURE CHEQUE CLEARING MODEL PLACES EMPHASIS ON SPEED AND INNOVATION").

Britain and the EU will develop their own regulatory regimes in parallel, particularly in new areas such as fintech, [green finance](https://www.financedigest.com/how-is-green-finance-reshaping-the-banking-industry.html "How is green finance reshaping the banking industry?") and crypto, Glen added.

There was, however, concern among non-EU banks about EU proposals that could force them to [set up a branch when providing wholesale market services to clients](https://www.financedigest.com/unicredit-sets-out-8-billion-aid-package-for-italy-clients-hit-by-surging-prices.html "UniCredit sets out  billion aid package for Italy clients hit by surging prices") in the bloc, Glen said.

“We will be expecting the EU to clarify where they are going. They seem to be moving in a positive direction and I welcome that,” Glen said.

(Reporting by Huw Jones; editing by Barbara Lewis)


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