The London Stock Exchange Group (LSE) has welcomed heightened supervision from the EU of some clearing services but dug in its heels over plans to force the industry to move away from the UK.
In response to new supervision rules on euro clearing proposed by the European Central Bank (ECB), the LSE argued that the EU must treat separate parts of the clearing industry differently. While some require closer EU supervision, others do not.
The City of London currently handles more than 90 per cent of euro-denominated derivatives clearing activities. The ECB in 2015 failed to push big clearing houses from London to the Eurozone, but Brexit has reignited the issue.
The LSE said some products, like EU sovereign debt repurchase agreements, or repos, play a direct role in the central banks' monetary policy operations, making them of particular importance for the EU.
"Likewise, services clearing products with higher liquidity needs and which closure could have spill-over effects on the broader market could justify heightened oversight from central banks of issue and specific cooperation between regulators."
"Asset classes should thus be treated in a completely different manner and call for different supervisory solutions," the LSE said.
The group also hit back at European plans to force the huge market out of London, saying: "[We are] deeply concerned about the ability of ESMA and the central banks of issue to recommend that the commission denies the recognition of third country CCPs [central counterparty clearing houses] of substantial systemic importance."