On 12 November the Mayor of London, Sadiq Khan, told German Finance Minister Olaf Scholz that it is in the interests of the long-term stability of the continent’s financial markets that London retains its status as the venue for the vast bulk of Europe’s clearing services.
Clearing houses play an essential role in a stable financial system and are used by banks to settle trades of stocks, bonds and other types of financial derivatives.
Currently, 80 per cent of euro-denominated derivatives are cleared in London due to the capital’s pre-eminent position as a global leader for financial services.
In Brussels last month, Sadiq met Valdis Dombrovskis, the European Commission vice-president with responsibility for the Euro, to discuss the role of London’s financial services post Brexit.
Since then, Commissioner Dombrovskis has said that if the UK crashes out of the European Union with no deal, the EU will continue to recognise London’s clearing houses for a temporary period.
Sadiq told the German Finance Minister that EU banks and traders should not be ‘locked out of London’s clearing houses’ after this period ends.
He added that it would be mutually beneficial for a permanent arrangement to be reached that allows continuing access to the capital’s global clearing services market.
The Mayor of London, Sadiq Khan, said: “I am pleased that the EU will continue to allow access to UK clearing services in the short term, if Brexit talks end in a no deal. However, London’s status as a global leader in financial services cannot be replicated elsewhere in Europe, and so I’ll be calling on Mr Scholz to work with me to ensure financial markets across Europe are given a long-term commitment that businesses will be able to access the capital’s clearing services.
“We want to work with other major financial European centres such as Berlin and Paris so that we can all continue to prosper.”
The Mayor met Olaf Scholz earlier this week as part of a two-day trip to Berlin and Paris in his bid to protect the capital’s economy from the effects of Brexit and reiterates his message that ‘London Is Open’ to visitors, investment, talent and ideas.
While in Brussels on 2 November, Sadiq also met the EU’s chief Brexit negotiator Michel Barnier. In the Belgian capital he urged the EU institutions and for the ‘EU27’ nations to begin preparing to extend Article 50, the law which paves the way for a country’s exit from the EU.
Next month, Sadiq will take his message to Dublin where he will meet with leading Irish business leaders and senior politicians.