By Huw Jones
LONDON, Feb 2 (Reuters) - Asset managers, hedge funds
and banks on Thursday called on the European Union to properly
cost its plans to force market participants to shift derivatives
clearing business from London to mandatory accounts in the bloc.
London Stock Exchange Group's LCH and ICE in London have
long dominated parts of the euro derivatives market, but the EU
wants direct say over this activity measured in trillions of
euros to ensure financial stability after Britain's departure
from the EU.
The cross-industry call in a joint statement said the
proposals to bolster euro denominated derivatives clearing in
the EU would damage the bloc's capital market.
"They would make EU firms less competitive and would have a
negative impact on the derivatives market, EU clearing members
and their clients, EU investors and savers, and the Capital
Markets Union," the statement from four industry bodies on
Thursday said.
The EU has singled out three derivatives contracts, short
term interest rates, interest rate swaps, and credit default
swaps, all heavily cleared in London, that it wants built up in
accounts at clearers like Deutsche Boerse in the bloc.
Derivatives industry bodies ISDA and FIA, hedge fund and
alternative investments association AIMA, and EFAMA, which
represents the EU's asset management industry, said the plans
would be costly to implement.
The plans, in the form of a legislative proposal from the
European Commission (EC), need approval from EU states and the
European Parliament to become law.
"We believe the EC should substantiate the risk of clearing
through tier-two CCPs (central clearing parties) based outside
the EU and provide a robust cost-benefit analysis of the
proposed active account requirements," they said.
A strategy based on organic growth and market-driven
solutions would best support the competitiveness of EU clearing
houses in a global clearing marketplace, they added.
(Reporting by Huw Jones
Editing by Mark Potter)
Messaging: huw.jones.thomsonreuters.com@reuters.net))
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