Brussels extends EU banks' access to UK clearing houses until 2028

The proposal introduces a new ‘equivalence decision’ that would allow EU-based banks and financial institutions to continue using London’s key clearing houses until June 2028. Clearing houses, which reduce market risk by acting as intermediaries in financial trades, are central to managing derivatives transactions.

EU dependency on UK clearing infrastructure 

According to the Financial Times, since the 2016 Brexit referendum, EU policymakers have sought to establish a euro-denominated clearing industry within the bloc. However, the EU’s financial system remains heavily reliant on London, which dominates global derivatives clearing.  

On average, London handles approximately USD 3.5 trillion in nominal daily trades, primarily at the London Stock Exchange Group’s LCH and the Intercontinental Exchange (ICE). The proposed extension would build on the current permit, which is set to expire in June 2025. EU member states have five days to raise objections, but officials have indicated that significant opposition is unlikely. 

A spokesperson for the European Commission’s financial services department emphasised the importance of UK clearing houses, describing them as vital to EU financial stability. The extended equivalence decision is intended to mitigate risks to financial stability and provide clarity to market participants, he added.

EU efforts to develop independent clearing capabilities 

Despite the extension, Brussels remains committed to reducing its reliance on London. Recent amendments to the European Market Infrastructure Regulation (EMIR) mandate that EU-based banks maintain ‘active accounts’ at clearing houses within the bloc for certain products. Additional requirements aim to gradually shift more clearing activity to EU firms if specific thresholds are surpassed. 

The regulation includes measures designed to enhance the competitiveness of EU clearing markets, a strategy intended to support the development of a rival infrastructure and decrease dependence on UK clearing over time. The managing director of the European Services Forum welcomed the decision. He noted that it provides clarity for EU market operators and signals a potential reset in the EU-UK relationship.