Hold & fold

20 December 2018 By Christopher Thompson, Neil Unmack Follow @CGAThompson

The bloc will allow banks to use UK clearing houses for a year, the minimum to spare $60 trln of swaps being cancelled if Britain can’t agree an exit deal. The temporary waiver also gives Europe a negotiating tool, and forces banks to shift business and staff across the Channel.

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Most banking, insurance and other financial services firms in Britain would be cut off from the European Union if the country is unable to reach a deal with the bloc, the European Commission said on Dec. 19.

The commission’s contingency plans for a so-called no-deal Brexit said that UK operators would as of March 29 lose the right to provide financial services to companies in the EU under what's known as a passport.

The EC also said that European companies could continue to clear derivatives at UK clearing houses for a year, and to use UK securities depositaries for two years. It also took steps to make it easier for banks and counterparties to shift over-the-counter swaps to European counterparties in the year after the UK leaves the bloc.

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