BlackRock’s Hildebrand sees euro clearing leaving London post-Brexit

DUBLIN (Reuters) – Clearing of euro-denominated financial contracts will have to leave London and turn into inside the Eu when Britain leaves the bloc’s single market, BlackRock’s Philipp Hildebrand said .

Britain is the main centre in the multi-billion-euro clearing business – mainly via London Stock Exchange’s LCH.Clearnet business – nonetheless it is dominance has been called into question by Brexit.

“A single thing is very clear to my advice that if you could be really outside, I don’t learn how clearing could be outside the Eu,” said Hildebrand, vice chairman of BlackRock, the world’s biggest asset manager, as well as a former governor of non-EU Switzerland’s central bank.

“This appears fairly obvious in my opinion that if essentially indeed a challenging Brexit, i.e completely outside the European Union, considering market, I don’t really observe how the core financial functions, clearing being 1, could be anywhere but inside the European Union,” Hildebrand told a banking conference in Dublin.

Prime Minister Theresa May caused it to be clear yesterday that Britain would go away the EU’s single market of 500 million people.

An EU official told Reuters a few weeks ago that the bloc is considering legislative measures to consider clearing of euro-denominated derivatives along with other financial contracts towards the euro zone, a big difference of location which Hildebrand said appears “fairly self evident”.

Frankfurt or Paris are the most likely centres for taking euro clearing business when it moves from London.

The London Stock game has endorsed sell its French clearing business to Paris-based Euronext (ENX.PA) to appease regulators investigating its planned merger with Deutsche Boerse (DB1Gn.DE), but said last month it didn’t have plans to shift other sections of its clearing business to Germany.

Britain’s financial services minister Simon Kirby told Reuters yesterday evening, ahead of May’s speech, that keeping the euro-denominated clearing business within london even after Britain leaves european union is in Europe’s interest.