EU finance chief compares access to the City to reliance on Russian gas Business

The EU finance commissioner has sparked fury by comparing the bloc’s reliance on the City of London to its reliance on Russian oil and gas.

Clearinghouses act as intermediaries in derivatives trading between banks and have become a key part of the financial system since the 2008 financial crisis.

Continent banks and fund managers have long authorized their transactions in London and have been allowed to continue to do so until June 2025 despite Brexit.

Mairead McGuinness, Commissioner for Financial Services, said: “Now is the time for Europe, the EU of 27, to take some very strong decisions on financial stability and the financial system, just as we are doing today. very critically and very urgently around our overreliance on energy from Russia.

Ms McGuinness added: “We need to be careful about areas where we are vulnerable to decisions made outside the EU, and therefore beyond our control.

“Energy is the biggest and most urgent example of this vulnerability right now. But we also need to watch for vulnerabilities in capital and financial services.”

Andy Mayer of the Institute of Economic Affairs, a think tank in London, said: “The commissioner’s crude comparison between an ally and a hostile power engaging in illegal war on European soil is deeply regrettable.

“The EU would do better to focus on lowering trade barriers to reduce its exposure to a single trading partner, including the UK.”

Ms McGuinness told a European Central Bank event on Wednesday that she would propose new legislation in October. This could include incentives to use clearing services in the bloc and disincentives, such as fees, for those in London.

Pension funds and public entities could be required to stick to EU houses.

LCH, the clearing arm of the London Stock Exchange, handles around 90% of interest rate derivatives in euros, a contract widely used by firms in the bloc.

Brussels and the European Central Bank have long been pushing for a move from the City to Frankfurt, but that has yet to happen.

Earlier this year, Ms McGuinness allowed UK firms to continue providing clearing services to the EU after failing to convince them to move their business to the continent.

The extension was seen as recognition by the bloc of the Square Mile’s crucial role in the health of European business and finance.