The European Union is set to delay a decision on allowing City of London clearing houses to continue clearing euro transactions for EU-based clients due to concern over Britain’s plan to breach its Brexit divorce settlement, a derivatives industry source said on Monday.
Brussels had already said it would grant Britain “time-limited” access to euro clearing from January to avoid huge disruption to markets as a unit of the London Stock Exchange LSE.L clears the bulk of euro-denominated swaps that are widely used by companies.
The bloc’s executive European Commission was due to formally take the decision on access later this week, but is now expected to delay this until around the end of the month, the source said, citing an industry meeting late last week with a European Commission official.
The European Commission had no immediate comment.
The delay was linked to Britain’s perceived unpicking of the Withdrawal Agreement it signed with the bloc, the source added.
Britain left the EU in January and transition arrangements that still allow unfettered access to the bloc, end on Dec. 31.
Without legal certainty of access to the EU, the LSE’s clearing unit LCH must give its clients in the bloc three-months’ notice to move their swaps positions out of Britain.