Britain to sue ECB over threat to City

An European Central Bank policy paper, released in the summer of 2011, requires clearing houses to be based in the eurozone if they handle more than 5% of the market in a euro-denominated financial product.

The United Kingdom is taking the ECB to the European Court of Justice (ECJ) to strike down the rule on the grounds that it restricts the free movement of capital and infringes on the right to establish cross-border businesses across a multicurrency European Union.

The policy, if enforced by the ECB, would undermine London’s financial market infrastructure since it would require that clearing houses shift many of their operations to the eurozone – most likely Frankfurt or Paris.

BBC News, 14.9.11: UK taking legal action against European Central Bank http://www.bbc.co.uk/news/business-14923544

EurActiv, 15.9.11: Britain to sue ECB over euro-area clearing rules http://www.euractiv.com/euro-finance/britain-sue-ecb-euro-area-clearing-rules-news-507681

ECB: Eurosystem Oversight Policy Framework http://www.ecb.int/pub/pdf/other/eurosystemoversightpolicyframework2011en.pdf?7e208f67f73837e4ccc01a75b90962ea

European Commission: DG Internal Market and Services: Financial Markets Infrastructure: Derivatives http://ec.europa.eu/internal_market/financial-markets/derivatives/index_en.htm

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