Brexit and Future of UK : Discussions
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Exclusive: France ramps up pressure to shift $200 billion euro clearing away from London - sources
LONDON/PARIS (Reuters) - France is looking at ways to lure clearing in euro derivatives away from London to the European Union to lessen the risk of any forced “relocation” backfiring by driving business instead to the U.S., financial industry officials said.
Britain left the EU last month and no longer has a seat at the table when it comes to discussions over financial regulation, giving France an opportunity to ratchet up the pressure to win more clearing business for itself.
The London Stock Exchange’s (LSE.L) LCH unit clears more than $200 billion in euro denominated derivatives daily for customers in the EU.
Globally, it clears more than 90% of euro interest rate swaps, a financial contract heavily used by companies on the continent to shield themselves against unexpected moves in borrowing costs.
Clearing is a crucial part of any transaction, ensuring deals are honored even if one side goes bust. Loss of clearing responsibilities could mean other elements, such as trading itself, moving.
Success by rival clearing house Eurex, part of Deutsche Boerse (DB1Gn.DE) in Frankfurt, to win market share from LCH have been modest despite sweeteners being offered.
French finance ministry and Bank of France officials have told financial sector representatives that moving euro clearing from London to the single currency area is now a “priority”, people with knowledge of the discussions said.
French officials told industry representatives that the EU needed to build up its own capital market.
The European Central Bank should have a “final say” over clearing houses dealing in large volumes of euro-denominated securities to safeguard financial stability, the people said.
The French finance ministry told industry representatives that it was looking at what sort of incentives could be provided for banks and others to move clearing voluntarily.
LCH has built up its dominance by offering efficiencies such as netting positions across different currencies to reduce the amount of margin or cash needed to back the trades.
“They are thinking how to deliver benefits similar to cross-product margining and netting across currencies if euro-denominated clearing is separated from other products,” an industry official said.
A source at the French finance ministry said it considers clearing houses as systemic market infrastructure for the euro zone.
“We are willing to open a discussion on how to move them back to the euro zone,” the ministry source said.
“We believe that France has all the right assets to carry out the tasks of clearing houses in the euro zone,” the source added.
The Bank of France had no immediate comment.
After December, LCH will need permission from the EU to continue clearing swaps for customers inside the bloc under an EU market access system known as equivalence, which will feature in trade deal negotiations between Britain and the EU due to begin next month.
Access can be granted if Brussels decides that LCH’s UK rules are equivalent or as strict as those in force in the EU to protect customers and financial stability.
Industry officials expect LCH to be granted equivalence at least for the medium term given the risk to financial stability if positions worth billions of euros have to be shifted at short notice.
If granted, and as a last resort, the EU can hit the “relocation” button, forcing LCH to move clearing to the EU to avoid losing EU clients.
LCH has a subsidiary in Paris but adapting it to clear interest rate swaps would be costly. LCH has already moved clearing in euro-denominated repurchase agreements or repo from London to Paris in the hope of easing pressure for more relocation of clearing, but it is not enough to satisfy the French authorities.
Britain has warned that forced relocation could backfire with euro clearing moving instead to the United States, which already has an equivalence agreement with the EU.
LONDON/PARIS (Reuters) - France is looking at ways to lure clearing in euro derivatives away from London to the European Union to lessen the risk of any forced “relocation” backfiring by driving business instead to the U.S., financial industry officials said.
Britain left the EU last month and no longer has a seat at the table when it comes to discussions over financial regulation, giving France an opportunity to ratchet up the pressure to win more clearing business for itself.
The London Stock Exchange’s (LSE.L) LCH unit clears more than $200 billion in euro denominated derivatives daily for customers in the EU.
Globally, it clears more than 90% of euro interest rate swaps, a financial contract heavily used by companies on the continent to shield themselves against unexpected moves in borrowing costs.
Clearing is a crucial part of any transaction, ensuring deals are honored even if one side goes bust. Loss of clearing responsibilities could mean other elements, such as trading itself, moving.
Success by rival clearing house Eurex, part of Deutsche Boerse (DB1Gn.DE) in Frankfurt, to win market share from LCH have been modest despite sweeteners being offered.
French finance ministry and Bank of France officials have told financial sector representatives that moving euro clearing from London to the single currency area is now a “priority”, people with knowledge of the discussions said.
French officials told industry representatives that the EU needed to build up its own capital market.
The European Central Bank should have a “final say” over clearing houses dealing in large volumes of euro-denominated securities to safeguard financial stability, the people said.
The French finance ministry told industry representatives that it was looking at what sort of incentives could be provided for banks and others to move clearing voluntarily.
LCH has built up its dominance by offering efficiencies such as netting positions across different currencies to reduce the amount of margin or cash needed to back the trades.
“They are thinking how to deliver benefits similar to cross-product margining and netting across currencies if euro-denominated clearing is separated from other products,” an industry official said.
A source at the French finance ministry said it considers clearing houses as systemic market infrastructure for the euro zone.
“We are willing to open a discussion on how to move them back to the euro zone,” the ministry source said.
“We believe that France has all the right assets to carry out the tasks of clearing houses in the euro zone,” the source added.
The Bank of France had no immediate comment.
After December, LCH will need permission from the EU to continue clearing swaps for customers inside the bloc under an EU market access system known as equivalence, which will feature in trade deal negotiations between Britain and the EU due to begin next month.
Access can be granted if Brussels decides that LCH’s UK rules are equivalent or as strict as those in force in the EU to protect customers and financial stability.
Industry officials expect LCH to be granted equivalence at least for the medium term given the risk to financial stability if positions worth billions of euros have to be shifted at short notice.
If granted, and as a last resort, the EU can hit the “relocation” button, forcing LCH to move clearing to the EU to avoid losing EU clients.
LCH has a subsidiary in Paris but adapting it to clear interest rate swaps would be costly. LCH has already moved clearing in euro-denominated repurchase agreements or repo from London to Paris in the hope of easing pressure for more relocation of clearing, but it is not enough to satisfy the French authorities.
Britain has warned that forced relocation could backfire with euro clearing moving instead to the United States, which already has an equivalence agreement with the EU.
So it looks like the 4-day 1st war of Brexit is officially over:
Brexiters got all excited on Brexit day as Guernsey banned French fishermen.
Everything was fine till Guernsey fisherman went to process their fish in France.
France refused, the fish rotted & now the war is over.
Brexiters got all excited on Brexit day as Guernsey banned French fishermen.
Everything was fine till Guernsey fisherman went to process their fish in France.
France refused, the fish rotted & now the war is over.
The EU will tell Britain to give back the ancient Parthenon Marbles, taken from Greece over 200 years ago, if it wants a post-Brexit trade deal
The EU will tell Britain to give back the ancient Parthenon Marbles, taken from Greece over 200 years ago, if it wants a post-Brexit trade deal
The EU will tell Britain to give back the ancient Parthenon Marbles, taken from Greece over 200 years ago, if it wants a post-Brexit trade deal
Lol.. British Museums will only have some pictures of their Queen, if they start giving back stuffs they looted from across the world.
Go for it. A trade deal is more in the interests of the EU, you're the ones with the surplus trade in goods. The only chance you have of getting shared fishing access or any of this other BS is to offer continued free access for financial services. Without that it's not really even worth having a free trade deal with you.
Despite US tariffs and Brexit concerns, French wine and spirits exports hit record high in 2019
KEY POINTS
KEY POINTS
- French exporters hit a new record in 2019 despite a growing cloud of economic and geopolitical anxiety.
- Overseas sales of wines and spirits rose 5.9% to a record $15.3 billion, according to the latest figures from the Federation of French Wines and Spirit Exporters.
- Sales to the United States, the largest export market for French wines and spirits, rose 16% to $3.9 billion in 2019.
Despite US tariffs and Brexit concerns, French wine and spirits exports hit record high in 2019
KEY POINTS
- French exporters hit a new record in 2019 despite a growing cloud of economic and geopolitical anxiety.
- Overseas sales of wines and spirits rose 5.9% to a record $15.3 billion, according to the latest figures from the Federation of French Wines and Spirit Exporters.
- Sales to the United States, the largest export market for French wines and spirits, rose 16% to $3.9 billion in 2019.
People drink in Both Situations --
Joy and Grief ,Celebration and Mourning
There is No substitute for Alcohol
People drink in Both Situations --
Joy and Grief ,Celebration and Mourning
There is No substitute for Alcohol
The export of French wines depends solely on production: For Bordeaux wines, for example, export demand is three times greater than supply. Trump had said that California wines were as good as French wines, but it does not seem that the majority of American consumers agree with him! That is why his tariffs are not effective.
It is true that Trump is not an example of good taste.
UK has great future. Heh @BMDIn the UK, two Pakistani peacekeepers Abdul Basit and Amjad have been arrested who used to feed people in their restaurants by mixing human feces in their food, the investigation by the police proved that the lab test report also came and they were arrested! pic.twitter.com/UuVovLJCKd
— Saini (@saini_politics) April 20, 2020
How does human feces taste? Especially Pakistani
@Arsalan123 @safriz did you people contribute too....
@_Anonymous_
Finaly perhaps Macron saved Boris life! askin for more stringent measures...
Quoting some white supremacist tweets?
They have been trying to destroy takeaway business for a long time, but that's the best source of cheap readymade food for the British public .
Daily mail and such are far right news papers and will exaggerate any such news and then white supremacist Twitter handles promote the news.
Have argued with them many times.