The news we’re reading this week includes –
- Efforts to pull euro clearing from UK receive funds industry backing – Funds Europe, 22nd November
The challenge to London’s dominance of the euro derivatives clearing market, estimated to be worth €1 trillion-a-day, has received a boost, with the news that the German national funds association, the BVI, has said that moving euro clearing to within the EU would “significantly” reduce costs for the funds industry.
The BVI released a statement that said that as interest rate swaps are an integral part of fund risk management, the best solution post-Brexit was for the clearing of euro-denominated interest rate swaps to occur within the EU, in order to save companies up to 30 per cent.
BVI made the announcement following the publication of a report by a Frankfurt-based funds house, Union Investment, which suggested that the savings would be generated “primarily from offsetting effects of various asset classes and more lucrative collateralisation options”.
- EU clearing plans for City run into resistance across bloc – Financial Times, 28th November
The European Commission’s (EC) plans to force parts of the City’s clearing business after Brexit are facing resistance due to governments’ reluctance to accept a more centralised financial services supervision within the EU.
In June, the EC suggested giving the European Securities and Markets Authority (ESMA) a greater oversight of clearing houses. The plans even give EU authorities the power to decide if some clearing activities should be repatriated within the bloc, if they were to be seen as posing a systemic risk.
As well as being reluctant to hand power to the ESMA, governments including those from Denmark, Finland and the Netherlands have warned that splitting legislation would set a worrying precedent of enabling governments to cherry-pick the parts of laws that they want.
- OFR adds repo to securities financing data collection – Securities Lending Times, 28th November
- SFTR may enable AI in securities lending – Securities Lending Times, 30th November