The same cannot be said of manufacturing. If UK based manufacturers lose easy access to the EU market, there is a huge incentive for them to leave. Probably to Ireland.
There's a Chrome plugin that disables HTML5 video autoplay, with per-site toggles available. Most sites don't get that permission, but things like Youtube or other video sites (ahem) can get it easily.
Firefox has an option not to auto play movies but it can be hit and miss. It also doesn't cater to the middle line like youtube where I want auto play but not until the tab is focused.
Maybe it's just me, but attempting to restrict the geographic location of where something can be cleared seems completely delusional to me. Isn't the EU basically asking the UK clearing firms to "give" their customers to the EU -- whatever that means?
I would assume that moving EUR clearing to the EU would involve setting up a company in the EU that can compete with the clearing services of the UK companies, thereby winning over customers, rather than attempt to put a restriction on which kinds of contracts (Euro derivatives) other people can enter into.
It's not as simple as that. E.g a lot of the clearing is for trades that actually transacted in e.g Rome, Paris, Frankfurt, etc. Those contracts are covered by EU law and therefore the EU wants clearing of those contracts to be conducted under EU law. Especially since the ECB is backing those trades.
Here's the tricky bit though. If London does keep this clearing business, it will almost certainly be on the basis of aligning relevant U.K. Law with EU law. But that will mean the U.K. Having to rubber stamp any changes in those laws directly into our law books, without having any say in drafting them as we won't have any representation in Brussels. There are loads of other examples of this sort of thing. So much for Brexit winning back more sovereignty to the UK Parliament!
Fair disclosure, I'm going to be working for LSEG from week after next.
Yeah the flip side argument though is that the clearinghouses are essential to the proper working of the European economy, and the regulators want to make sure they have the legal power to actual regulate it.
That is problematic since the UK will no longer be directly under European regulatory control. Like, what if London clearinghouses massively screw up somehow, and leaves Europe on the hook?
Having control over your own economy's plumbing might be a vital strategic interest -- it's the same rationale for restricting free trade in weapons, for example. Of course, the European banks have a naked self-interest in making that argument as well.
I'm not saying the EU politicians don't want to control the derivatives trade, I'm saying they're essentially incapable of doing so, because anyone can write up a contract that's settled in EUR. No one can prevent that, although the EU might be able to force the UK to ban it, they know it would just move elsewhere due to its nature.
Controlling EUR is one thing; the EU has complete control here with the ECB. Controlling EUR-denominated contracts is something completely different, because EU-legislation has little efffect outside the EU (unless you're a friendly neighbor like the UK).
The EU doesn't want to see EUR derivatives trading move to Panama or the Cayman Islands, so they've become content with leaving it in the UK, I believe.
Anyone, anywhere can write up and exchange a contract that's settled in EUR. But EU-based financial services companies required to comply with risk management regulations aren't necessarily allowed to treat those contracts as financial assets equivalent to derivative products written up and cleared in a properly regulated environment.
(since they don't have the same enforceability through EU courts in the event of a party or counterparty defaulting, or probability of the ECB stepping in to purchase them in the event of a systemic crisis, the additional risk to holding them isn't purely hypothetical)
As a consequence, EUR derivatives contracts which are settled in ways approved by EU regulators have higher value, and so the vast majority of EUR-denominated derivatives clearing business is going to take place in jurisdictions the EU regulators are satisfied is an appropriately regulated environment.
I see how the EU can control EUR derivatives within the EU, but I fail to see what kind of legislation the EU can pass that will have an effect in the U.K.
What would the legislation involve? A derivative is just a contract between two parties saying EUR must be paid upon a list of conditions. How is the EU going to stop this?
I'm arguing that if they did pass a law that just bans foreign derivatives trade outright, the trade would simply move to a country less friendly to the EU than the UK. And the EU knows this, so they're backing off with the legislation, since they consider themselves better off with the middle-way of at least containing it in London.
The type of legislation in question is quite familiar to us when named as it normally is: as a trade sanction.
Essentially the EU just passes a new regulation (note: EU Commission can make new law that overrides national law and it is not accountable) that states you cannot purchase services in categories X, Y and Z from the UK on pain of fines or imprisonment. No different to any other trade sanction. It is not legally complicated to implement.
EU commission can't pass new law, that's the prerogative of the EU parliament which is directly elected by European citizens and as such fully accountable.
From the first paragraph under "powers and functions"
The Parliament and Council have been compared to the two chambers of a bicameral legislature.[44] However, there are some differences from national legislatures; for example, neither the Parliament nor the Council have the power of legislative initiative (except for the fact that the Council has the power in some intergovernmental matters). In Community matters, this is a power uniquely reserved for the European Commission (the executive)
The thing they call a Parliament can't actually change anything about the EU. It can only ask the Commission to do so for it.
The European Parliament doesn't have the power of legislative initiative, but laws must be voted, possibly significantly amended, and finally passed by the parliament (and council) [1].
As far as I understand, the Parliament has the right to ask the Commission to submit a law, and although the Commission is not bound by it, by consuetude it does. So, de-facto, it has initiative power.
[1] in some some areas (market exemption and competition) the Parliament only has a consultative role, although it can still filibuster a law. This consultative role was eliminated in the European Constitution Treaty, giving Parliament full voting right on all laws, but that treaty was rejected (it is as if people don't want the EU to become more democratic!)
America does pass laws like that, frequently. Things related to defence, for example.
The EU can absolutely impose trade sanctions on the UK in order to force business out of it. The UK can do the same in reverse. Brexit is a trade war, have no doubt about it. People just don't call it that.
I think your conflating a little in both examples.
Everyone understands that 'defence' contracts are geopolitical, and there have always been expectations around those controls - from parts to purchases - so it's already in the system.
"The EU can absolutely impose trade sanctions on the UK in order to force business out of it. The UK can do the same in reverse. Brexit is a trade war, have no doubt about it. People just don't call it that."
All of those points are not appropriate.
There will not ever be any 'trade sanctions' for UK doing clearing of EU dollars. Nobody is even suggesting that. To do so would rattle all markets internationally, and kill confidence in the Euro. The Euro would lose 20% of it's value overnight, and would never recover.
The UK could not do the same in reverse (how does it ban the EU from doing Euro cleared transactions?)
And Brexit is not a 'trade war'. It's just Brexit. The 'worst case scenario' is the UK is a country that trades with EU like any other: USA, Japan, Canada. There is no 'trade war' between USA and EU.
The issues regarding EU wanting to have it's clearing within it's own jurisdiction are reasonable, but the system can't be changed overnight.
The EU is about to go through another crisis because Italian banks are about to default, and all of that lending goes through London. So guess who the EU needs?
Brexit will probably work out with some kind of trade deal, specifically involving financial services.
Not appropriate? You may not agree, but how are my opinions "not appropriate"?
I was obviously talking in generalities: if the EU banned or tariffed its citizens from buying service X from the UK, that doesn't mean it has to be service X that is banned or tariffed in reverse. That's never how sanctions are applied.
The 'worst case scenario' is the UK is a country that trades with EU like any other
I can think of many worst case scenarios worse than that. I think what you mean is, you don't personally anticipate it getting worse than that.
> if the EU banned or tariffed its citizens from buying service X from the UK
It can't, because the UK will be a member of the WTO, like the EU. Members of the WTO can't discriminate unfavorably against individual nations in the way you're suggesting.
But for an enterprising upstart, there's a super welcoming continent that's more than happy to help you rinse the market for a little while to further their own objectives.
Under what circumstances does the ECB's role as lender of last resort for a clearinghouse provide value? Would not having to provide that service for these clearinghouses be a good thing if it obligates (or effectively forces) the Bank of England to serve in that capacity instead?
Under what circumstances does the ECB's role as lender of last resort for a clearinghouse provide value?
A Euro liquidity crisis.
Would not having to provide that service for these clearinghouses be a good thing if it obligates (or effectively forces) the Bank of England to serve in that capacity instead?
Um, the BoE doesn't do Euros. By converting such derivatives to GBP, it would exacerbate a Euro liquidity crisis.
This is a bit more limited than that, one really specific part of the banking system. Right now, Euro-denominated transactions can be cleared in many locations, of which London is one, with a large share of the total volume. Some Eurozone countries would like to require that this take place only in Eurozone countries, and unsuccessfully pushed for that previously. Some of them think the UK leaving the EU presents a good opportunity for a renewed push in that direction (since it weakens the UK's role in internal EU politics). The people quoted in this article think that's unlikely to happen.
This is all pretty deep in the weeds for a nonspecialist audience though, I think.
The problem with the bankers analysis is that the EU has already tried to force clearing out of the UK, by passing regulations that openly violated the EU treaties themselves. The UK had to go to the highest courts to get the rules rolled back. It was a long and expensive legal process. The only reason the EU hasn't already tried to gut this business from the City of London is because their courts ruled they couldn't do that to an EU member, not through a lack of will. They certainly either don't think it'd be dangerous or (more likely) don't care.
The people who run the EU are far more concerned with prestige than the details of these mechanisms. They don't like the UK, never have, and it bugs them that London - which doesn't use the euro - is so important to the parts of Europe that do. It's an itch they can't scratch.
> This is all pretty deep in the weeds for a nonspecialist audience though, I think.
It's the tip of the iceberg perhaps. Deep in the weeds for sure but rather influential. Clearing is important but really what this is saying is "business as usual".
The UK would be wise to play chicken as not cooperating with the UK is bad for everyone (The EU knows this but they have to posture). The UK will smartly make some concessions that especially punish the districts that made this happen (No one will really talk about this). British Sterling will suffer for awhile as being less global should make your currency less valuable and it will - expect parity with the USD in the short term. Those who don't travel won't care and those that can won't notice.
Everyone wins then. The will of the people is had, the people that are affected contain the blast radius and life goes on, business as usual. Which is good. And we all live on.
Governments can't "punish" Parliamentary Constituencies so presumably he means most of England outside of London along with the whole of the country of Wales.
Which just goes to show how ludicrous the assertion is - all the Parliamentary talk right now is about desperately trying to connect/reconnect to the voters in these areas (who remember are the MAJORITY of the voters in those areas).
The only people who will be punished will be those who try to punish others. The former Chancellor of the Excheqeur (Finance Minister) talked about a "punishment" budget if the people voted to leave the EU. Please note I said "former" - he was sacked.
They don't need to explicitly punish areas like Wales, just treat them like they have been treating them - business as usual without EU Regional Development funding will be devastating. Nobody's talking any more about having vast sums of money available to reallocate, so unless we're cutting somewhere else I don't see how that vast EU pool is being replaced.
Same is likely to happen in Cornwall. The local MPs are pushing for the UK government to replace the EU structural adjustment funds with equivalent amounts of UK funding, but it's now looking very unlikely that this will happen.
That was everywhere in England and Wales apart from London? Interesting low sterling rewards these places... it makes it cheaper to onshore work to them, and it lowers the actual cost of providing things to them (social security and health)
That was everywhere in England and Wales apart from London?
It depends on the scale you look at. Looking at the regional count results, only three of the 12 regions (Greater London, Northern Ireland, and Scotland) voted to remain, and the electorate in these regions makes up 23% of the total. But looking at the voting areas, 119 of the 382 (i.e. 32%) areas voted to Remain, and 37% of the electorate live in a voting area that had a majority for remain [0].
These voting areas are mostly in Scotland or NI, but there are isolated pockets around major Northern cities (Liverpool, Manchester, Newcastle, and Leeds), and the cluster centered on London reaches across much of the South (North East to Cambridge, West to Cardiff, and South to Brighton). See this map [1], a map in which the voting areas are scaled in proportion to their population [2].
"Despite French and German threats to claw away clearing in euro-denominated derivatives, Britain will probably continue to house trillions of euros of swaps trades because limiting where the operations can take place could backfire, said the executives from several global firms"
"Bankers have not been unanimous in their views, however. Executives at four of the biggest global investment banks in London in September said they expect France and Germany will prevail in the clearing tussle."
Some bank execs think that it will stay, other bank execs think that it will leave.
The title should have been "Clearing in dispute as Brexit moves on". But that probably is not what the flavor of the news source wanted people to reflect on.
> The title should have been "Clearing in dispute as Brexit moves on". But that probably is not what the flavor of the news source wanted people to reflect on.
Why would anyone who is actually really affected by these esoteric things make it harder on themselves?
If you look to an older article from November 2016 http://www.telegraph.co.uk/business/2016/11/17/europe-is-unl... from another news source it is better written and makes a more clear point.