Following Brexit, the ECB is
likely to take steps to achieve its goal again. As a result of the application of
other regulatory requirements, additional areas may also be forced to relocate to
the eurozone, for example, back office, sales and trading positions.
would be possible to break up large sections of the investment banking value
chain. However, this threatening scenario for the City appears to be relatively
unlikely because both the stability of the financial system and geopolitical
considerations are likely to exclude such a drastic step. A sign as to how
successful this will be in strengthening the eurozone’s clearing houses could
come in the coming months in the planned merger between the London Stock
Exchange and Deutsche Börse. One goal of the merger is to generate synergies
by linking London’s largest clearing house, LCH, with Deutsche Börse’s Eurex.
This could indicate whether Brexit will bring about in a shift of power in
However, Frankfurt could also be used as a location for
regulatory arbitrage – i.e., formal compliance with regulations – while, in effect,
essential parts of the clearing business remain in London. In this case, the
positive stimulus for Frankfurt would be quite small.