The EU has acknowledged that a sudden cut-off in access could undermine financial stability as users sought to shift large derivatives positions at short notice, giving it little choice but to grant what it has dubbed “time limited” access.
The EU document, which was seen by Reuters and is out for consultation among EU states since Monday, said access would start on Jan. 1, 2021 and expire on June 30, 2022.
Granting temporary access is aimed at giving time for euro zone-based clearers to “further develop their capacity to clear relevant trades”, the document said.
Signed by European Commission president Ursula von der Leyen, the document said the derivatives industry is also expected to develop a “clear process” to reduce exposures to systemically important clearing houses in Britain.
Access will also depend on the Bank of England cooperating “closely” with EU authorities, and on the bloc’s markets watchdog ESMA having “immediate access in all situations” to all information on risks from British-based clearers.