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FirstFT: Brussels demands share of London derivatives clearing


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The EU will demand that derivatives traders use accounts at clearing houses in the bloc for some of their transactions as part of plans to take a share of the €115tn market processed through the City of London.

Banks dealing with large quantities of contracts that regulators deem “systemic” will have to clear a minimum amount of business using active accounts in EU-based clearing houses, officials briefed on the proposals said.

The plans are part of a package intended to boost Europe’s capital markets and reduce reliance on the UK’s financial services sector after Brexit. The European Commission is planning to outline the measures next month when it publishes proposals.

“It’s a very active policy in the EU to repatriate business back to the eurozone. They want to have control over where it is happening” — Karel Lannoo, chief executive of European think-tank CEPS

Most of the world’s interest rate swaps are processed in London at clearing houses that have not moved since Brexit. Politicians in the EU are unhappy that euro-denominated derivatives are handled in a market outside their regulators’ direct oversight.

What is your reaction to the plans? Let me know at firstft@ft.com. Thank you for reading FirstFT Europe/Africa. — Jennifer

1. UK business and unions blast EU rules bonfire Prime Minister Rishi Sunak is under pressure from an alliance of business, legal, worker and environmental groups to drop plans to automatically strip EU-derived laws from Britain’s statute book by the end of next year. Brexiters have argued the process will deliver a “productivity boost” to the UK economy.

Thank you to everyone who took part in yesterday’s poll. Fifty-nine per cent of respondents agreed that the EU’s plan to cap gas prices to avoid a repeat of surging energy costs was “a joke non-cap”.

2. Most Fed officials back slower rate rises ‘soon’ A “substantial majority” of US Federal Reserve officials back slowing down the pace of interest rate rises soon, while some warned of greater than expected monetary policy tightening next year, according to an account of their most recent meeting. In US and European stock markets, some of the world’s largest asset managers remain unconvinced that the recent recovery will last.

3. Disney awarded Iger $10mn consultancy deal to advise CEO Bob Iger received a $10mn deal to advise his successor Bob Chapek even though the two executives were barely on speaking terms. Iger returned to Disney this week as chief executive after his chosen heir Chapek was ousted in an internal revolt.

4. Swaths of Ukraine left without power Russia fired dozens of missiles yesterday, leaving vast expanses of the country and more than half of neighbouring Moldova without power, in Moscow’s latest attempt to cripple civilian infrastructure.

5. Yandex seeks Vladimir Putin’s approval for restructuring The company often described as “Russia’s Google” is seeking the president’s blessing to sell its operations in the country, spin off its main international projects and appoint a longtime Putin confidant to manage its relationship with the Kremlin.

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The day ahead

UK postal worker strike The walkout over working conditions will be the first of several in the run-up to Christmas. The Communication Workers’ Union claimed last week that Royal Mail had walked away from negotiations after presenting staff with a “take it or leave it” proposal.

Central banks Sweden’s Riksbank announces its latest interest rate decision. Analysts predict soaring inflation will push policymakers to take a more hawkish stance; ING has predicted a 75 basis point increase, with a final 50bp rise in February. Elsewhere, the European Central Bank publishes an account of its latest monetary policy meeting. South Africa also holds its monthly rate-setting meeting, while in Turkey, policymakers are expected to continue their rate-cutting streak.

Corporate earnings Ingka Group, which owns most Ikea stores worldwide, reports full-year figures including profits for the home furnishing retailer. Other companies reporting include Dr Martens, Jet2 and Rémy Cointreau, while Kingfisher delivers a third-quarter trading update.

World Cup Brazil kick off against Serbia. Neymar, 30, may have his last shot at winning Brazil’s sixth World Cup. He has already posted an Instagram picture of the country’s crest bearing the sixth star. Switzerland also faces Cameroon, while Uruguay goes head to head against South Korea.

Neymar
At 30, Neymar is a different footballer than the poor kid from the port town of Santos who emerged a decade ago  © FT montage; AFP/Getty

Thanksgiving US stock and bond markets are closed for the national holiday, which is normally plagued with travel chaos and road gridlocks. This year more than 54mn people are estimated to travel 50 miles or more to visit loved ones, according to the AAA. (CNN)

What else we’re reading

How magical thinking enabled the rise — and fall — of FTX Since the cryptocurrency exchange imploded this month, it has become clear that the concentration of power, coupled with a lack of oversight, caused massive customer losses because funds were funnelled around with no accountability. Gillian Tett reflects on the sector’s deep contradictions.

How to gamble £600mn of public money If your job is to maximise the amount of money that goes to good causes, gambling hundreds of millions of pounds on the chance you might be able to bring in a bit more over 10 years seems risky. That’s what the UK’s Gambling Commission did when it spurned National Lottery operator Camelot’s application for a new licence, writes Cat Rutter Pooley. But that might not have been a bad bet after all.

The contest over the Catholic Church’s future The question of who will replace Pope Francis, who turns 86 next month, looms large. The pontiff is no darling of progressive Catholics, for whom his approach to issues such as homosexuality is too cautious. Still, he is regarded as more reformist. Tony Barber asks, what does the future hold for the Church?

Ireland’s millionaire homeowners belie inequality gulf Who wants to be a millionaire? In Ireland, where household net wealth is at a record high, one in eight households already is — on paper, at least. Housing accounts for much of this increase for the richest 10 per cent. That means it’s getting difficult for the next generation to own a home. Jude Webber explores.

How to disagree with your boss Last week, Elon Musk reportedly fired about a dozen engineers after they openly opposed him. It’s an extreme example of what can happen when you disagree with your boss. You’ll almost certainly disagree with your manager at some point in your career. This week’s Working It newsletter discusses how you should let them know.

Travel

Guyana is tipped as the next hotspot for travellers in search of adventure. But deep in the jungle, just upriver from a thundering waterfall in a sinking boat, Jamie Lafferty got more than he bargained for.

The view from the top of Kamarang Falls
The view from the top of Kamarang Falls © Jamie Lafferty

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