The European Union might grant temporary permission for clearing houses in Britain to continue serving EU customers if there is a no-deal Brexit next March, an EU document seen by Reuters showed.
“As regards cleared derivatives, it appears that there might be potential risks to financial stability in a no deal scenario,” the undated document, which sets out the European Commission’s draft contingency plans in case of a no-deal Brexit, said.
“On this basis, the Commission will continue to assess the situation and take the necessary measures to mitigate risks in this area,” it added.
Financial industry bodies such as ISDA want the EU to authorise LCH to continue clearing euro-denominated contracts in time for next March to avoid potential disruption.
But such measures would be aimed at facilitating “a transition to achieving sufficient capacity within the EU”, the document said.