UK financial derivatives will be cut off from the EU, a bloc official confirmed

Britain’s derivatives houses will be cut off from the European Union, a financial services boss has said.

Mairead McGuinness confirmed non-EU, UK-based companies will no longer be able to carry out their activities from the bloc from June 2025, in a further blow to British financial services.

Javier Hernani, head of financial firm SIX Securities Services, told City A.M: “We have to make the most of these three years in order to ensure that the stability and security of European clearing is not compromised.

Financial companies leaving the UK post-Brexit?

“However, one can’t help but think that this is not the final chapter in this long running debate. Ultimately, every market participant has the same goal of reducing costs and risks and, crucially, increasing capital efficiencies around the posting of collateral.”

Onshoring clearing operations to Europe have been a key goal of EU politicians after Brexit, but finance firms have reportedly been reluctant to move to Europe from London because of huge administrative costs.

However, in December, it emerged that EU financial companies appeared uninterested in staying in the UK post-Brexit, as only half of European firms who had temporary licenses to operate in London applied for full authorisation.

EU firms were given the temporary licenses immediately after Brexit by the Financial Conduct Authority, to encourage them to continue their activity during final negotiations.

But according to Financial News findings, only half of the licence-holders applied for full authorisation since then, suggesting firms are widely uninterested in staying in the UK.

‘Less reach in future’

Although financial watchdog FCA contacted dozens of firms over the summer, applications did not increase according to City AM.

When the window closed on 30 September, 33 out of the 72 companies expected to apply did not do so, amounting to 46 per cent of all firms Britain was counting on.

Niki Beattie, founder and CEO of Market Structure Partners, told Financial News that “you could interpret this as the UK having less reach in future”.

A week before, it emerged that the only thing keeping bankers in London from moving to the EU post-Brexit were the government’s lockdowns and Covid travel restrictions.

Despite the obstacles, almost half of 222 financial services institutions in the City and Canary Wharf moved or were planning to move their London staff and services out of Britain and to Amsterdam, Milan, Frankfurt or Paris – a three per cent increase compared to last year.

And new hires directly related to Brexit reached over 5,000 roles, of which 2,800 were created in the EU, compared to 2,200 in Britain, EY’s Brexit Tracker survey results showed.

Andra Maciuca

Andra is a multilingual, award-winning NQJ senior journalist and the UK’s first Romanian representing co-nationals in Britain and reporting on EU citizens for national news. She is interested in UK, EU and Eastern European affairs, EU citizens in the UK, British citizens in the EU, environmental reporting, ethical consumerism and corporate social responsibility. She has contributed articles to VICE, Ethical Consumer and The New European and likes writing poetry, singing, songwriting and playing instruments. She studied Journalism at the University of Sheffield and has a Masters in International Business and Management from the University of Manchester. Follow her on: