Britain’s market watchdog eased restrictions on cross-border derivatives trading in a move to calm fears of market turbulence just hours before the Brexit transition period ends.
European Union and U.K. laws that threatened a
$200 billion-a-day
market in London for interest-rate swap trades. London-based branches
of European investment banks such as Deutsche Bank AG and Societe
Generale SA will be permitted to trade on EU venues, as long as they are
trading for EU clients.
With the EU refusing to grant equivalence to the U.K. market
to smooth cross-border transactions, the FCA said it would alter its
rules on a temporary basis, with a review by March 31. The relief will
not extend to the firms’ trades on behalf of non-EU clients or their own
proprietary trades to hedge risks.
The spat on derivatives was one of the highest-profile
worries for the financial industry, which was not included in the wider
Brexit trade agreement. EU and U.K. authorities have warned of challenges
facing the market for many common derivatives transactions, while
industry lobby groups suggested that some trade might flee Europe
altogether and head to jurisdictions where U.K. and EU firms are both
able to trade, such as the U.S...
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