Exit from EU to hurt London in clearing, warns France’s Hollande

Bloomberg

French President Francois Hollande targeted a key pillar of the U.K.’s financial industry, calling into question the City of London’s status as a clearing hub after Britons voted last week to leave the European Union.
“The City, which could make its clearing operations in euro, won’t be able to do so any more,” Hollande said after the first day of an EU leaders’ summit in Brussels. The vote for Brexit shows that the U.K. has turned its back on the principle of free movement of people, he said. When you abandon one of the EU’s key pillars “you lose the advantages that come with it.”
EU leaders are already planning for a future without the U.K. after last week’s shock referendum result. After an emotional dinner attended by Prime Minister David Cameron last night in which all sides expressed their regret about Britain’s vote to leave, the other 27 leaders will meet without Cameron on Wednesday.
As the EU starts to hammer out its negotiating position ahead of divorce talks, Hollande also took a hard line on the single market, which the U.K. still wants to access, by arguing the British government must agree to all its rules rather than cherry pick.

Victory
“The U.K. has said it doesn’t want any more freedom of movement,” the French president said. “Now it won’t have access to the single market any more.”
The U.K.’s finance industry scored a big victory over the European Central Bank last year when a court in Luxembourg allowed euro-denominated trades to be cleared in the U.K. Clearinghouses were embraced by regulators after the 2008 financial crisis, when the collapse of Lehman Brothers Holdings Inc. threatened to bring down other institutions. Clearing firms stand between buyers and sellers, holding collateral from both, in case a member defaults. Big trading companies are increasingly required to use them.