FRANKFURT (Reuters) - The European Union could lose some of its supervision and oversight of clearing activities once Britain leaves the bloc, European Central Bank President Mario Draghi said in a letter to a member of the European Parliament on Tuesday.
“In a post-Brexit environment, UK financial market infrastructures (FMIs) would be considered as third-country FMIs rather than EU entities,” Draghi said.
“This could lead to a reduction in the level of supervision and oversight of UK central counterparties by the EU authorities, including the ECB as central bank of issue of the euro,” Draghi said.
The ECB wants to put euro-denominated clearing under the control of the Eurosystem, the ECB and the 19 euro zone central banks, effectively forcing it to leave London. But discord on the Governing Council has stalled its efforts to come up with a concrete proposal, sources have told Reuters.
The European Commission has said it plans to present a legislative proposal in June, which could include, if necessary, enhanced EU supervision and location requirements for clearing activities.
Reporting by Balazs Koranyi; Editing by Louise Ireland