Britain takes ECB to court over clearing house policy

14th September 2011, Comments 0 comments

Britain said Wednesday that it was taking legal action against the European Central Bank over a new policy London fears could force clearing houses to move to eurozone countries.

"We have begun proceedings against the European Central Bank through the European Court of Justice," a British finance ministry spokesman told AFP.

The ECB proposal, published in July, would in future require clearing houses dealing with the single currency to be based in the eurozone, raising fears that the institutions might leave the City of London for Paris or Frankfurt.

"This decision contravenes European law and fundamental single market principles by preventing the clearing of some financial products outside the euro area," said the British spokesman.

He added Britain was determined to ensure "there is a level playing field across the EU for British businesses."

The ECB did not wish to comment when contacted by AFP.

London is notably home to leading clearing house LCH.Clearnet, in which the London Stock Exchange has reportedly sought a controlling stake.

Britain is a member of the 27-nation European Union but not of the 17-member eurozone.

Clearing houses play an increasing important role in maintaining the stability of the financial system, ensuring the security of transactions between investors on the markets.

© 2011 AFP

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