One clearing service by LCH Ltd, and two by ICE Clear Europe Ltd, are too important to be dropped by the EU, the markets supervisor concludes in a statement.

“The Report identifies three clearing services, one provided by LCH Ltd and two by ICE Clear Europe Ltd, as being of substantial systemic importance for the European Union’s financial stability and posing risks that may not be fully mitigated under the current EMIR regulatory framework. It concludes that the costs and risks of derecognising these services would outweigh the benefits to the EU at this time,” says the European Securities and Markets Authority (ESMA) in a news release.

While generally in line with expectations, it is a step towards an EU decision to make today’s temporary time-limited recognitions permanent. Such a decision would reduce uncertainty for the many EU-based users of these UK-based clearing services. Market participants have pointed to urgency in getting clarity on the matter, as shifting to EU-based clearing houses could require preparation under time pressure, causing costs and risks. The status of the UK-based clearinghouses is one of the issues still left open after the main Brexit negotiations, and the EU has appeared to weigh the attraction in letting EU-based entities take over the business, versus the risks if it were to kiss established providers with high liquidity goodbye.