Brexit shouldn’t affect where clearing houses are, top US watchdog declares

A leading US watchdog has weighed in to the row over where euro clearing houses should be located once Britain leaves the EU by saying that regulators should butt out and let the market decide.

America’s Commodity and Futures Trading Commission boss Sharon Bowen said it doesn’t matter where derivatives clearing houses are based — a implicit rebuke to EU policymakers who are trying to restrict euro derivatives clearing in the UK after Brexit is achieved.

“We consider that it is not for regulators to determine where business should take place — this is a global market,” she told a conference in Malta yesterday.

The CFTC does not need dollar-denominated transactions to be cleared in the US — a stance at odds with European policymakers who insist on having a location policy.

The issue is in focus following the LSE’s failed merger with Deutsche Borse, which had seen the French bit of its LCH clearing unit up for sale.

The UK won a landmark court case in 2015 against the European Central Bank, who had tried to force euro clearing houses into the eurozone, but Brexit has raised ECB hopes again.

“The [central counterparty clearing house] which deals with the largest [dollar] set of transactions is not located in the US. We don’t see this as an issue as we have a great communication with this institution,” Bowen said.