EU companies could have temporary access to UK clearing houses in No Deal Brexit

The European Commission vice-president, Valdis Dombrovskis, has provided reassurance to EU companies that they will temporarily be able to use derivatives clearing services based in the City of London in the event of a No Deal Brexit. 

The measure, which reportedly reflects the findings of a joint working group of Bank of England and European Central Bank officials, follows months of warnings from the European financial industry that EU companies would face significant increased trading costs if they lost access to clearing services overnight.

Dombrovskis, who is responsible for EU-level financial regulation, said on Thursday that the measure would be strictly short-term. 

“Should we need to act, we would only do so to the extent necessary to address financial stability risks arising from an exit without a deal, under strict conditionality and with limited duration,” he said.

Separately, the UK Treasury has announced that, in the event of a No Deal Brexit, it will introduce a provisional tax of £16 a tonne on carbon emissions. 

The tax will broadly replicate the EU Emissions Trading Scheme, which raises the price of coal for power plants and factories in order to disincentivise its use and reduce pollution.

The Dutch financial markets authority (AFM) said it was making preparations for an increase in financial trading as many trading houses would be relocating to the Netherlands, especially in the event of a No Deal Brexit scenario.

The AFM said in a statement, “While border and customs negotiations are attracting attention, there is a fairly invisible shift taking place in European capital markets…The AFM is conducting conversations with more than 150 parties that are interested in a [Dutch trading] license.”

Meanwhile, UK-EU negotiations have resumed this week, with Prime Minister Theresa May’s Europe adviser Oliver Robbins and European Commission deputy chief negotiator Sabine Weyand meeting in Brussels. 

Elsewhere, the Commission and EU27 ambassadors are privately meeting later this week to discuss the impasse over the Irish backstop and the next steps in Brexit negotiations.

Separately, former Brexit Secretary David Davis said at an event hosted by the Institute of Economic Affairs that there would likely be a Brexit deal, predicting, “Terror will win. The fear of no deal, the irrational fear of no deal, will win.” He added, “It [the deal] may take two passes, there may be a deal [which] passes in Brussels and fails in Westminster… but it will pass.”

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Martin Banks

Martin Banks

Martin Banks is a highly qualified journalist with many years experience of working within the EU institutions. He is an occasional, and highly valued, contributor to EU today, writing on a wide variety of issues.

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