Britain wins key EU concession on trading laws

City A.M. Reporter
THE UK has struck a deal with countries in the European Union that could reduce the risk of trading and clearing activities being moved overseas from London.

Member states have agreed to include a rule into a key piece of law which would ban policies by regulators or the pan-European regulator European Securities and Markets Authority that “discriminate” against a member state, such as the UK.

The clause will alter legislation that regulates how markets work across Europe, known as the Markets in Financial Instruments Directive (MiFID), which could be used to protect the City of London.

The clause states that no action taken should “directly or indirectly, discriminate against any member state or group of member states as a venue for the provision of investment services and activities in any currency.”

The agreement, which is set to be signed off on Friday by EU finance ministers, follows more than two years of intense negotiations between member states.

Negotiations will now begin in the European parliament with the rules becoming law in 2014.

The UK is currently suing the European Central Bank for a policy which could force top London clearing houses which process euro-denominated transactions – such as LCH.Clearnet – to be based away from London in the Eurozone.

MiFID has been under discussion for about 30 months and have been dragged down by squabbling between member states on the small print of the agreement.

Last week the 27 member states signalled a breakthrough after reaching a settlement on the disagreements, which were thought to centre on variety of issues from trading on so called dark pools to classification of assets.

The deal is major boost for Ireland, which is nearing the end of its presidency within the next two weeks, which has been pushing for agreement on the proposal.