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UPDATE 1-LCH boss says no big shift in euro clearing ahead of Brexit

Updated: 13-02-2019 16:25 IST
UPDATE 1-LCH boss says no big shift in euro clearing ahead of Brexit

There has been no big shift in euro clearing activity from London to the European Union ahead of Brexit, the chief executive of the London Stock Exchange's clearing unit said on Wednesday.

"We have seen no discernible change in behaviour of customers, banks, asset managers. There is clearly lots of marketing and media, but in terms of the facts, we have not seen any discernible change in behaviour," LCH's Daniel Maguire told a panel of lawmakers in parliament. Britain leaves the European Union next month, but the bloc has said it would allow EU customers to continue using LCH for up to a year if Britain departs with no transition deal on March 29.

LCH clears over 90 percent of interest rate swaps, a derivative contract used by companies to shield themselves against unexpected moves in borrowing costs. Deutsche Boerse's Eurex has launched a programme of sweeteners to attract clearing in interest rate swaps from London.

Euro zone policymakers also want to see more euro clearing being undertaken inside the bloc and not in London so that the activity comes under direct EU supervision. "If you look at market share, volume and facts, there hasn't been a material shift in volumes," Maguire said.

"What we have seen is discernible change in marketing. Competitors are definitely levergaging Brexit uncertainty to fuel their competitive aspirations." (Reporting by Huw Jones; editing by Jason Neely and Emelia Sithole-Matarise)