Dominic Raab dismisses EU threat to City of London
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The move would be a significant post-Brexit boost for the City and would come as a major blow to French President Emmanuel Macron, who has attempted to lure global banks away from the city. Macron invited an elite group of global banking heads such as JP Morgan boss Jamie Dimon and Goldman Sachs’ David Solomon to a “Choose France” event in June this year, to make the case for investing in his country.
This came when Britain still had very restrictive quarantine measures in place as a result of the pandemic.
According to the Telegraph, senior executives were becoming increasingly frustrated with the rules.
Speaking to Bloomberg TV this week, the London stock exchange chief David Schwimmer said: “My expectation is that the European Commission will find a way to continue allowing EU-domiciled member banks and other institutions to continue to access [London clearing houses].
“It’s clearly recognised that it is a critically important service for the EU institutions who are using it, so it would be bad for them if they were cut off from it.
“We’ll continue to engage with the various stakeholders.
“I expect we’ll see something probably early in the new year.”
The move marks a major Brexit victory, as, before the referendum, finance chiefs warned that clearing – along with more than 200,000 jobs in the City – would be collateral damage in our exit from the EU.
However, a mass exodus of finance jobs out of London has failed to materialise.
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According to EY’s Brexit tracker, only around 7,500 jobs and £1.2 trillion in assets have left the City since the UK voted to quit the EU in 2016.
The figure is vastly below projections, such as that proposed by Xavier Rolet, former chief executive of the London Stock Exchange, who claimed more than 230,000 jobs could be lost.
JP Morgan, whose parent company’s chief executive previously claimed Brexit may cause 4,000 British jobs to be lost, will have relocated fewer than 400 by the end of this year, while Morgan Stanley has relocated just 150 roles.
Mr Schwimmer’s comments came just weeks after EU financial services chief Mairead McGuinness promised that there would be “no cliff edge” over EU banks’ access to UK clearinghouses, which act as middlemen in trading and play a crucial role in financial stability.
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She said the Commission would not engage in “any sudden twists and turns” on a decision over the licence that allows European banks to clear deals worth billions of euros in London.
A clearinghouse is an intermediary between buyers and sellers of financial instruments.
It is an agency or separate corporation of a futures exchange responsible for settling trading accounts, clearing trades, collecting and maintaining margin monies, regulating delivery, and reporting trading data.
The UK’s clearinghouses were given permission to continue to operate in the EU on a temporary basis until June 2022 in order to secure financial stability post-Brexit.
President Macron’s relationship with the UK has been increasingly rocky over the last few weeks, as a result of the fishing row which has dominated UK-France relations.
However, Mr Macron showed signs of mellowing when he withdrew threats of sanctions on the UK, which he had issued in response to a lack of fishing licences being issued to French fishermen.
He said: “Since this afternoon, discussions have resumed on the basis of a proposal I made to Prime Minister Johnson. The talks need to continue.
“My understanding is that the British were going to come back to us tomorrow with other proposals.
“All that will be worked on. We’ll see where we are tomorrow at the end of the day, to see if things have really changed.
“My wish is that we can find a way out on all these issues.”
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