Loss of London clearing may cost €77bn, says stock exchange chief

Removing euro clearing due to Brexit would have a ‘prohibitive cost on European banks’

London Stock Exchange, its chief executive Xavier Rolet said: “If we allow continuation of the non-economic, non-commercial nature to split up clearing . . . it will never come back to London.” Photograph: Nick Ansell/PA Wire

London Stock Exchange, its chief executive Xavier Rolet said: “If we allow continuation of the non-economic, non-commercial nature to split up clearing . . . it will never come back to London.” Photograph: Nick Ansell/PA Wire

 

The loss of London’s euro clearing industry as a result of Britain’s Brexit vote could translate to €77 billion in added margin contributions from banks, said London Stock Exchange chief executive Xavier Rolet.

Some 90 per cent of US dollar domestic interest-rate swaps are cleared in London, making the City’s clearinghouses the “envy” of other cities, Rolet said at a House of Commons event on Tuesday in London.

Removing clearing would have a “prohibitive cost on European banks,” he said. “If we allow continuation of the non-economic, non-commercial nature to split up clearing, first off, it will never come back to London,” Rolet said. “It is very unlikely, as some obviously have an inclination to see it move to Europe, whether it’s Paris or Frankfurt. What is most likely is that it will be New York.”

London Stock Exchange is currently being bought by Frankfurt-based Deutsche Boerse AG.

– Bloomberg