Derivatives: tensions rise between London and Brussels

Thunderclap on the City! In a press release, published Wednesday morning, the European markets policeman showered London’s hopes of maintaining, on British soil, exchange of interest rate derivatives in euros. A market of 50,000 billion euros in notional, which includes in particular swaps, very widely used by banks and companies to hedge against rate movements, and which the British expected to keep in full after the end of the period. post-Brexit transition, December 31.

But Esma was categorical: from January 1, 2021, European banks will have to carry out their transactions on platforms located on the territory of the European Union, or in a third country benefiting from the equivalence regime. . This obligation will also apply to branches of European banks established in London. These will therefore find themselves subject to both EU and UK regulations, which can be contradictory.