15 Sep, 2011

Britain set to sue European Central Bank for ‘disadvantaging the City’.


Britain is to sue the European Central Bank for setting rules that disadvantage the City and force major clearing houses to relocate their operations, the Financial Times reports.


The legal action relates to a recently released ECB policy paper which states that if clearing houses handle more than 5 per cent of the market, they should be based in the eurozone – but the product has to be a euro-denominated financial product.


The UK wants the regulation to be dropped due to claims that it is restrictive to the free movement of funds and will hamper the rights of cross-border business, according to the FT.  


In reaction to the news, Michael McKee, Partner at DLA Piper, said: “There would certainly appear to be a prima facie arguable case that any attempt to require a clearing house, located in the EU but outside of the Eurozone, to relocate inside the Eurozone breaches EU Treaty free movement requirements. 


The EU treaties relate to all EU countries.  The Eurozone is not a separate legal entity for EU Treaty purposes.”


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