By Daniel Flynn For The Daily Mail Published: 16:51 EDT, 11 June 2017 | Updated: 16:53 EDT, 11 June 2017 Brussels is expected to anno
Brussels is expected to announce whether it will force London’s £747billion-a-day euro-clearing business to relocate to the eurozone after Brexit on Tuesday, in what could be a major blow for the Square Mile.
The European Commission is looking at how to control overseas clearing houses which have a hand in the EU economy.
Clearing houses stand between two sides of a trade to ensure its smooth completion, and also set aside funds to protect investors when a trade defaults.
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The London Clearing House, which is part of the London Stock Exchange, clears £747billion of euro-denominated contracts a day, or 75 per cent of the global market.
This has been the case for decades now, but could soon come to an end.
Critics have long argued that euro clearing belongs on the continent; in 2011 the European Central Bank tried to move the activity away from London but was overruled by the European Court of Justice in 2015.
The argument has flared up again in the last year after the UK voted to leave the European Union, with opponents arguing that Brussels will have much less oversight over the London Clearing House after Brexit.
This led Valdis Dombrovskis, EU financial services commissioner, to confirm that the European regulator was investigating the issue earlier this year.
He outlined three options for the future of euro-clearing which include allowing the UK to continue as it is; introduce tougher policing in London from the EU; or move the business to the continent.
It is expected to formally pick one of these scenarios on Tuesday.
The London Stock Exchange’s boss Xavier Rolet has been a vocal opponent of any change.
In an interview with the Sunday Telegraph yesterday, he said any change would result in ‘complete chaos’ and ‘has not been thought through.’
He also warned the move would put hundreds of thousands of jobs at risk and cost more than £78billion.