European Banks Seek EU Exemptions to Access London Trading Markets

Banking groups in the Eurozone want access to the London derivatives trading market — a multi-trillion dollar market — and other major markets.

Finance trade bodies are positing that the bloc is at a “cliff edge” unless it moves to further extensions letting European Union trades go forth in the U.K. and other major markets.

All of it is a blow to the plans of Brussels to take business from London.

A letter this month from several bodies, including the International Swaps and Derivatives Association, the European Association of Co-operative Banks, the European Banking Federation, the Futures Industry Association, the Global Financial Markets Association and the Nordic Securities Association, requested the extensions.

“If the temporary [arrangements] are allowed to expire without being replaced by equivalence decisions in all key jurisdictions, this will result in increased costs and operational burdens for EU firms while also resulting in trapped assets,” the letter said.

Currently, the EU banks rely heavily on the London market to help settle transactions between institutions. The process is important to keep financial markets running smoothly.

However, the European Commission hasn’t given Britain “equivalence status” for derivatives trading since Brexit — even though the U.K.’s post-Brexit rules are fairly similar.

The letter says that the trade bodies have asked Brussels to give permissions for trading for another three years instead of letting it expire at the end of June of next year.

PYMNTS has written that the U.K., in trying to figure out how things will work in the wake of Brexit, has been exploring an idea to expand the roles of financial regulators.

Read more: UK Expands Financial Regulators’ Duties

The report says that the U.K. wants regulators to help with growth and competition in finance, along with their usual tasks.

That will help give more freedom to regulatory agencies and let them do things like rewrite rules for IPOs, green finance and crypto.