Hedge funds want EU rethink on plans to shift euro clearing from London
Hedge funds, asset managers and banks have called on the European Union to carry out a proper costing of its proposals to make market participants move their derivatives clearing business from London to mandatory accounts based in the EU, according to a report by Reuters.
The EU wants a direct say over the multi-trillion euro activity which is currently dominated by the London Stock Exchange Group's LCH and ICE in the UK capital.
A legislative proposal from the European Commission (EC) has singled out three derivatives contracts, short term interest rates, interest rate swaps, and credit default swaps, all heavily cleared in London, that it to see hailed by EU-based clearers such as Deutsche Boerse.
But a joint statement from the Alternative Investments Management Association (AIMA), EU asset management industry body EFAMA, and derivatives industry bodies ISDA and FIA, said the plans would be costly to implement and damage the bloc's capital market, and that the EC should "provide a robust cost-benefit analysis of the proposed active account requirements."