London clearing houses have received authority to continue serving EU-based firms in the event of a no-deal Brexit, meaning that stocks, bonds and derivatives transactions will avoid disruption immediately after 29 March regardless of the Brexit outcome.

The European Securities and Markets Authority (ESMA) yesterday said it would officially recognise LCH, ICE Clear Europe and LME Clear in the event of a no-deal Brexit, allowing the organisations to continue providing services as normal in the EU.

In its announcement, ESMA said the recognition would limit the risk of disruption in central clearing and avoid any negative impact on the financial stability of the EU. However, it announced that plans to recognise the UK Central Securities Depository (CSD) were ongoing.

Two lobby groups, UK Finance and TheCityUK, welcomed the announcement from ESMA, but warned there was still working to be done to avoid disruption.

Earlier on in the month, the Bank of England and ESMA reached a memorandum of understanding, allowing UK clearing houses to be recognised by the EU regulators and granting EU firms access post-Brexit.

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