French securities regulator the AMF has told the EU that it should fix its derivatives trading rules to avoid damage to its own financial sector once the UK finally leaves the bloc on 1 January.
Robert Ophele, the AMF’s chair, said that if rules were not amended it would penalise European banks trading in London.
Under current rules, EU banks trading in London must use an EU-based or EU-approved system for trading.
But British rules oblige UK counterparties to trade on a UK approved platform, making cross-Channel deals impractical.
Ophele’s comments came after the European Securities and Markets Authority (ESMA) said that it would only monitor the situation.
“If we do so it will be too late. The harm will have been done”, he said. “I do hope that the European DTO can still be rapidly adjusted,”
The bulk of the trading that the rules cover, he pointed out, is in London, meaning that 70 per cent of volumes handled by EU banks there was at risk of being lost.
Attempting to create a deep capital market from scratch to avoid reliance on London without a “critical mass” of players would be “detrimental” to the EU, he added.