Britain and US reach deal over derivatives market

The US and UK have struck a deal to ensure the continuity of derivatives trading after Brexit, providing relief for the multitrillion-dollar industry.

The Banks of England said that the agreement, struck with the US Commodity Futures Trading Commission (CFTC), ensures regulatory certainty in the two countries, whatever the outcome of Brexit.

It comes after the EU regulator – the European Securities and Markets Authority – said earlier this month that it would allow UK clearing houses LCH, ICE Clear Europe and LME Clear to continue to provide services to firms based in the bloc in the event Britain crashes out without a deal.

Governor 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”

Parliament remains in deadlock over Brexit having rejected Prime Minister Theresa May’s Withdrawal Agreement, with just over a month to go until Britain’s scheduled departure from the EU on March 29.

Christopher Giancarlo, chairman of the CFTC, said that London is, and will remain, a global centre for derivatives trading and clearing.