EU grants market access for U.S. securities clearing houses

Clearing houses ensure the completion of a stock trade even if one side of the deal goes bust

  

LONDON- Clearing houses for securities in the United States will be allowed to serve investors in the European Union, the bloc's executive European Commission said on Wednesday.

"This decision is a significant first step in the process of recognising U.S. central counterparties registered with the U.S. Securities and Exchange Commission in the European Union," the EU's financial services chief Mairead McGuinness said in a statement.

Clearers registered with the SEC include DTCC, ICE Clear ICE.N and London Stock Exchange's LSE.L Paris-based LCH SA.

Clearing houses ensure the completion of a stock trade even if one side of the deal goes bust, and the EU had already granted market access for U.S. clearing houses for derivatives.

But Wednesday's open-ended "equivalence" decision by Brussels contrasts with the time-limited access the EU has given clearers in Britain since it fully left the bloc on Dec. 31.

UK clearers, including the London arm of LCH, only have access for 18 months until June 2022, time the EU said this week that banks in the bloc should use to shift chunks of their euro derivatives positions to the euro zone.

The EU executive said U.S. securities clearers must respect certain risk management requirements known as "liquidation periods" and "anti-procyclicality measures" to activate EU access.

The EU wants to avoid U.S. clearers having a competitive advantage over European peers due to having less restrictive versions of such rules.

(Reporting by Huw Jones; Editing by Kirsten Donovan) ((huw.jones@thomsonreuters.com; +44 207 542 3326; Reuters Messaging: huw.jones.thomsonreuters.com@reuters.net))

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