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Britain is the main center for the multi-billion-euro clearing
business - mainly via the London Stock Exchange's LCH.Clearnet
business - but its dominance has been called into question by
Brexit.
"One thing is very clear to me that if you are really outside, I
don't see how clearing can be outside the European Union," said
Hildebrand, vice chairman of BlackRock, the world's biggest
asset manager, and a former governor of non-EU Switzerland's
central bank.
"It seems fairly obvious to me that if the end result is indeed
a hard Brexit, i.e completely out of the European Union, the
single market, I don't really see how the core financial
functions, clearing being one of them, could be anywhere but
inside the European Union," Hildebrand told a banking conference
in Dublin.
Prime Minister Theresa May made it clear last week that Britain
would leave the EU's single market of 500 million people.
An EU official told Reuters last month that the bloc is
considering legislative measures to take clearing of
euro-denominated derivatives and other financial contracts into
the euro zone, a change of location which Hildebrand said
appears "fairly self evident".
Frankfurt or Paris are seen as the most likely centers to take
euro clearing business if it moves from London.
The London Stock Exchange has agreed to sell its French clearing
business to Paris-based Euronext <ENX.PA> to appease regulators
looking into its planned merger with Deutsche Boerse <DB1Gn.DE>,
but said last week it had no plans to shift other parts of its
clearing business to Germany.
Britain's financial services minister Simon Kirby told Reuters
last week, ahead of May's speech, that keeping the
euro-denominated clearing business in London even after Britain
leaves the European Union is in Europe's interest.
(Reporting by Padraic Halpin; Editing by Susan Fenton)
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