Brexit Delivers a $400 Trillion Truce
The EU will cooperate with the City of London on derivatives clearing in the event of a no-deal departure. Don’t mistake this for a lasting global peace.
Brexit is just a preamble to the big fight in global derivatives: Europe versus the U.S.
Photographer: Mike Kemp/In PicturesBreak out the bubbly: Global financial regulators are starting to cooperate for the greater good as the Brexit deadline looms ever closer. Just don’t mistake an uneasy truce for a lasting peace.
This week’s agreement between EU securities regulator ESMA and the Bank of England is another step toward creating a post-Brexit safety net for the $400 trillion global derivatives market, which has long been at risk of severe disruption should the U.K. crash out of the EU without a deal. Rather than the draconian step of an overnight severing of ties between the euro zone and the City of London — where most euro-denominated interest rate swaps are processed — ESMA has agreed to keep recognizing British clearing-houses and to work with the BoE to maintain cross-border access.