LONDON, Feb 14 (Reuters) - Britain has filed a second lawsuit in the European Union’s top court to stop the European Central Bank forcing clearers like London-based LCH.Clearnet to relocate to the euro zone.
The first, unprecedented challenge was filed last summer after the ECB published its policy in July.
Britain sees the central bank’s policy as a challenge to its financial sector, Europe’s largest.
The UK said it filed its second challenge with the European Court of Justice (ECJ) in late January after the ECB signalled in November it would pursue its “location” rule despite concerns.
“There is no change to our policy, approach or position in any way - the government continues to believe the ECB’s proposed ‘location policy’ contravenes European law and fundamental single market principles by preventing the clearing of some financial products outside the euro area,” a UK finance ministry spokesman said on Tuesday.
“We hope to resolve this issue swiftly but will continue with legal action if necessary to ensure a level playing field,” the spokesman added.
The ECB had no comment.
Britain cites the EU’s fundamental tenets, in particular the freedom to set up a business anywhere in the 27-country bloc and the free movement of capital and services cross-border, in support of its case.
The ECB wants central counterparties (CCPs) who clear more than 5 percent of euro-denominated financial products to be in the euro zone. If something goes wrong, it could intervene fast without needing several central banks to coordinate.
Britain last week won backing from EU states to insert a clause into the bloc’s new derivatives clearing law that was finalised last Thursday and comes into force later this year.
The central role of the ECJ is to uphold EU law and the clause says no member state “should be discriminated, directly or indirectly, as a venue for clearing services.”
“Nothing in this regulation should attempt to restrict or impede a CCP in one jurisdiction from clearing a product denominated in the currency of another member state or the currency of a third country,” the clause added.
U.S. exchange groups CME and ICE have bases in the UK in an effort to build up European clearing footprints.