In a speech on Friday, François Villeroy de Galhau said Paris could become the EU’s main markets hub after Brexit. He also called for LCH, the clearing house controlled by the London Stock Exchange Group, to develop interest rate clearing services in the French capital.
His comments came as the European Securities and Markets Authority confirmed it was working on plans to issue short-term, conditional permits that granted access to vital UK market infrastructure. The permits, based on EU-wide rules, are known as “equivalence” standards.
Mr Villeroy de Galhau said equivalence on clearing “would obviously have to be a temporary solution, for a period of no more than a year or so”.
He also said it would also have to be tied to a strict timetable for the adoption of new rules for overseas clearing houses aimed at London. [...]
Mr Villeroy de Galhau proposed a “tailored transition regime” to allow insurers to slowly wind down their obligations to customers after Brexit. UK-based groups fear they may not be legally allowed to pay out on long-term contracts with customers in the EU.
The bank was “keeping an especially close eye on the small and medium-sized players,” he said.
[...]London-based exchanges and trading venues are worried they will be excluded from any temporary Brexit measures planned by Brussels.
“It is essential that further clarity and certainty is provided as a matter of urgency,” said Oliver Moullin, managing director of Brexit at AFME, the London lobby group. [...]
But Mr Villeroy de Galhau said Paris was well qualified to become the “market hub of this new European constellation” but the market needed to be more harmonised.
Paris hosts four of the euro area’s eight global systemically important banks, the top life and non-life insurance sector and asset management industry, Mr Villeroy de Galhau said.
On his call for LCH to develop interest rates clearing in Paris he added: “We must also deal with the question of private monopolies in the clearing sector. We must ensure that critical key players do not become ‘too big to fail’.”
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François Villeroy de Galhau: The consequences of Brexit for the French and European financial sectors
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