The European Union published three draft laws today to lift economic growth by deepening its capital market through less reliance on post-Brexit London, cutting red tape on company listings and streamlining insolvency rules.
Britain's departure from the EU has forced the bloc to review its reliance on London for clearing trillions of euros in derivatives, EU financial services commissioner Mairead McGuinness said.
The draft laws form the latest package in the bloc's efforts to build a capital markets union.
The first draft law seeks to build the bloc's own capacity to clear derivatives, partly by mandating banks to clear more of their transactions via "active accounts" with a clearer inside the EU, rather than in London, or face capital charges.
The portion that must shift would be decided by EU regulators, but the relocation would be "gradual" and "with the grain" of the market to cut excessive rather than all reliance on London, an EU official said.
"We are not going to disrupt markets here," the official said.
Britain is also reforming its own financial rules, with more changes due to be announced on Friday.
"We fully respect the right and capacity of the United Kingdom to do what it wants to do around its financial industry, in its interests, so I think there is a healthy respect and understanding of why we are doing it," Ms McGuinness said.
Banks pushed back against voluntary attempts to relocate euro clearing from London to Frankfurt, leaving the EU with little choice but to mandate the shift.
"It was never going to happen overnight. I think there is less resistance that there was in the early stages. There is an understanding that this is going to happen. We don't underestimate how big a change this," she said.
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