EU (Parliament Politic Magazine) – People who make rules in the European Union had a big disagreement on Wednesday. They were talking about whether to move the trading of euro derivatives, which are financial agreements, from London to places in the EU after Brexit. This caused a problem because they might end up making weaker rules that banks want. The European Commission suggested a new law. It says banks in the EU need to have accounts at clearing houses in the EU to trade certain agreements like euro interest rate swaps.
Danuta Huebner in Charge of Making Laws
London Stock Exchange Group’s part in handling euro-based IRS clearing worldwide is a worry for some EU decision-makers since the UK left the EU. Attempts to convince European banks to move this clearing to Deutsche Boerse in Frankfurt haven’t been very successful.
Danuta Huebner, a member of the center-right group in the European Parliament, is in charge of making the laws. The idea is that banks would first need to have an account, and later on, specific limits would be decided.
Some people in parliament want to make changes to a rule. Some want to remove a requirement, while others want to increase the rules gradually and punish banks that don’t follow them.
A person named Huebner believes that doing this step by step can fix the issues with the proposed changes. He talked about this in a meeting with a committee that deals with money matters. Banks say that if they have to move a lot of money from London to EU places, they won’t have enough money available and it will hurt their ability to compete worldwide.
According to Jonas Fernandez, a centre-left lawmaker, “We cannot support a two-stage approach as it stands”. “Yes, the implementation of these active accounts will have a cost for the actors of the sector, but this cost is very far from being problematic or prohibitive.”
EU Trying for A Certain Type of Financial Activity
Dorien Rookmaker, who is part of the group in charge on the right side in the parliament, said that the idea to make certain accounts active should be removed. She thinks that the European Union (EU) should try to make their share in a certain type of financial activity, called clearing, bigger by encouraging competition. Instead, she believes that creating rules that might make the industry less competitive and not very motivated is not the right approach.
The group plans to vote on a shared opinion in early November. After that, they will start discussing with EU countries to come up with a final agreement.
The companies in Britain that handle financial transactions (clearers) are allowed to keep working with customers in the EU until the end of June 2025. But not many people think they will be completely stopped from doing business with the EU after that.
The European Commission wants to make a new rule for banks in the EU (European Union). This rule says that banks need to open special accounts with a place that helps with transactions called a “clearing house.” These accounts are for dealing with certain agreements, like ones about interest rates.
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UK Leaving The EU
A lot of these agreements are handled by a company in London right now. But some people in the EU are worried about this because of the UK leaving the EU. They want to encourage EU banks to use a place in Frankfurt instead, but not many banks are doing that.
A person named Danuta Huebner in the European Parliament is in charge of making this rule. She has a plan: first, banks need to open these special accounts, and later on, they will decide how many transactions they need to do before this rule applies. The European Parliament and EU countries will decide together if this rule becomes official.
The group wants to make a decision together by early November. After that, they will start discussing with countries in the EU about a final agreement. Companies in Britain can keep helping customers from the EU until the end of June 2025, according to the EU’s permission. But not many people think they will be completely stopped after that.