A rule requiring large clearing houses in Europe to be located within the Eurozone has been dismissed by the European Court of Justice (ECJ), marking a decisive victory for the U.K. government and forces the European Central Bank (ECB) to scrap the policy.
The court said the central bank requirements went beyond oversight by intervening in the regulation of clearing houses, deeming the ECB lacks the “competence necessary to regulate the activities of securities clearing systems.”
The U.K. government launched the suit in 2011 after the ECB policy requested clearing houses, that handle significant euro-denominated business, should be based within the Eurozone.
The ruling cements the U.K. as Europe’s top financial market, keeping some of the world’s largest clearing houses, such as CME Clearing Europe, ICE Clear Europe and LCH.Clearnet, on British soil.
However, according to a statement from the Bank of England (BoE), the U.K. central bank will continue to cooperate with the ECB to meet the G20’s plans.
“The Bank of England recognises that the ECB has an interest in the safety and soundness of UK CCPs who clear significant amounts of euro-denominated contracts,” it states.
“The Bank and the ECB will continue to seek a coordinated and shared approach for achieving our common objectives of financial stability and the smooth functioning of financial market infrastructures.”
U.K. Victorious in EU Clearing House Battle
A rule requiring large clearing houses in Europe to be located within the Eurozone has been dismissed by the European Court of Justice (ECJ), marking a decisive victory for the U.K. government and forces the European Central Bank (ECB) to scrap the policy.
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