The UK and US have agreed a major derivatives trading deal to ensure “bridge over Brexit”.
The Bank of England, Financial Conduct Authority (FCA) and the US Commodities and Futures Trading Commission made a joint announcement on Tuesday, unveiling the agreement.
In a boost to the city, the deal will mean that derivatives trading between New York and London will continue, regardless of the outcome of Brexit.
Governor of the Bank of England, Mark Carney, said:
“Derivatives can seem far removed from the everyday concerns of households and businesses, but they are essential for everyone to save and invest with confidence.
As host of the world’s largest and most sophisticated derivative markets, the US and UK have special responsibilities to keep their markets resilient, efficient and open. The measures we are announcing today will do that. Market participants can be confident that the clearing and trading of derivatives between the UK and US will maintain the high standards of today when the UK leaves the EU”
J. Christopher Giancarlo, Chairman of the CFTC, said:
“London is, and will remain, a global center for derivatives trading and clearing.” He added that the measures would “provide a bridge over Brexit through a durable regulatory framework upon which the thriving derivatives market between the United Kingdom and the United States may continue and endure.”
Meanwhile, the Chancellor of the Exchequer, Philip Hammond said:
“The US and UK are fundamental to the smooth functioning of the world’s multi-trillion pound derivatives markets, with around 97% of the centrally cleared interest rate derivatives market located in London. The action we have taken today with our partners in the US will ensure that markets can continue to thrive without disruption, and is yet another example of the special relationship between our two countries.”
The Chancellor is set to present his Spring Statement Speech on the 13th of March.
The Chancellor’s speech will come just ahead of the government’s official Brexit deadline the 29th of March.
