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By Huw Jones
LONDON, June 20 (Reuters) - Proposed curbs on European Union based banks using derivatives clearing houses in London should be calibrated carefully to avoid harming customers in the bloc, officials at Germany's Bundesbank and French bank BNP Paribas said on Tuesday.
Following Britain's departure from the EU, the bloc wants to end EU banks' heavy reliance on UK-based clearers such as London Stock Exchange Group's LCH, and Intercontinental Exchange's ICE Clear, for clearing certain euro-denominated derivatives worth trillions of euros annually.
The EU has proposed that EU banks open "active accounts" with EU clearers like Deutsche Boerse's Eurex in Frankfurt to shift an as yet-to-be-determined amount of clearing from London to the bloc.
Haroun Boucheta, head of public affairs for securities services at BNP Paribas, said active accounts could encourage competition, but imposing rigid thresholds on EU banks could leave EU clients financially worse off.
"The active accounts should be calculated in the right way," Boucheta told a conference held by the Futures Industry Association.
The draft law is now being scrutinised by EU states and the European Parliament, with the thresholds for active accounts to be calculated by the bloc's securities watchdog ESMA.
In the meantime, EU banks can use UK clearers until end of June 2025 under a market access system known as equivalence.
Julia Froelich, senior expert in payments and settlement at Germany's Bundesbank, said incentives were needed to shift clearing from London given that large exposures to UK clearers could undermine EU financial stability and were not sustainable.
Voluntary efforts have seen limited success but active accounts should be calibrated to avoid harming the competitiveness of EU market participants, Froelich said.
Britain is maintaining high regulatory standards and not putting up any barriers to long-term EU equivalence, said Jon Relleen, director of infrastructure and exchanges at Britain's Financial Conduct Authority.
Britain and the EU are set to hold their first meeting under a post-Brexit memorandum of understanding on cooperation in financial regulation, raising industry hopes that equivalence could eventually be extended beyond June 2025.
"I don't necessarily think that we should see the MoU as suddenly unlocking this... We really get the fact that the market wants certainty," Relleen said. (Reporting by Huw Jones, editing by Ed Osmond)