UK clearing houses approved to continue EU business under no deal Brexit

Decision made to limit disruption and avoid potentially negative impacts on financial markets

Photograph: iStock

Photograph: iStock


Europe’s financial markets regulator has given UK-based derivatives clearing houses permission to continue serving EU clients in the event of a no-deal Brexit - a major boost to London’s battle to remain the central market for euro clearing.

The European Securities and Markets Authority (ESMA) said the decision to allow LCH Limited, ICE Clear Europe and LME Clear to continue operating was to limit disruption and avoid potentially negative impacts on financial market stability.

The recognition of the clearing houses as so-called “third-country central counterparties” under the EU’s European Market Infrastructure Regulation (EMIR), would come into effect on the day after Britain leaves the bloc, ESMA said in a statement.

The move, which had been expected after a draft decision in December, follows efforts by EU rival Deutsche Boerse to woo clients to its clearing house, Eurex.

Clearing involves passing stock, bond, derivative and repo trades through a third party backed by a default fund to ensure completion of the transaction even if one side of the deal goes bust.

“We are pleased to receive this recognition, which means that ICE Clear Europe can continue to service all its clearing members and customers, Finbarr Hutcheson, President of ICE Clear Europe, said in a separate statement. – Reuters