The UK looks set to take the European Central Bank to court over its proposals to only allow clearing houses that operate within the Euro-zone geographical area to trade in some of the securities denominated in the single currency.Same old, same old, you might say. There is a new twist to this story of trying to destroy the City of London:
This would then force some institutions to leave the UK’s City of London for locations in Paris or Frankfurt.
The London Stock Exchange is currently in talks with the intention of buying LCH.Clearnet, Europe’s last independent clearing house.But as we all know, such considerations matter little.
The problem is that under EU rules, which the UK Treasury says applies here, there is the presumption of free trade. But the ECB would presumably like to bring clearing into the 17 member Euro-zone for better control.
The UK Government will fight this proposal as it goes against the requirements of the larger EU of freedom of movement of services and capital as laid out in various treaties.
This latest move could be interpreted as the Euro-zone just trying to get its house better in order or perhaps France and Germany manoeuvring to enhance their own financial services sectors. But it could also be construed as yet another move to marginalise the UK or even move it that bit closer to joining the Euro-zone.Nothing matters when the project and its outgrowth, the euro has to be defended.
The EU treaties have already been effectively torn up over the bailing out of countries such as Greece, as the treaties do say that bail-outs are not possible. So more breaches that are in the interests of the Euro are almost a certainty and are likely to be supported by the EU courts, whatever the UK says.
There is more in the Telegraph:
The Government will launch its action on Wednesday and, if the ECB does not relent, will challenge the policy in the European Court of Justice. As well as breaking European law, ministers believe it contravenes international efforts to reform derivative markets through the G20, which has called for reforms to be implemented in an "internationally consistent and non-discriminatory way".We shall watch with interest.
A Treasury spokesman said: "This decision contravenes European law and fundamental single market principles... That is why we have begun proceedings against the ECB through the European Court of Justice. The Government wants to see this resolved swiftly and without involving the courts, but if necessary will not shy away from continuing legal action."