Banks and other market participants in the European Union will have to prove to regulators that they are not overly reliant on clearing houses in London for processing their derivatives transactions.
This is according to an EU draft document, seen by Reuters.
The EU has long wanted to end heavy reliance on London-based clearing houses, such as London Stock Exchange Group's, for clearing euro-denominated interest rate swaps, particularly now Britain is no longer a member of the bloc.
The EU's executive body, the European Commission, set out in a draft law proposed requirements for market participants to have an "active account" with a yet to be determined minimum level of activity at a clearing house in the EU.
"It is appropriate to require financial counterparties and non-financial counterparties ... to hold, directly or indirectly, accounts with a minimum level of activity" at clearing houses established in the EU, the draft said.
The measures are aimed at safeguarding financial stability, the draft added, with the minimum level of activity to be decided by the EU's European Securities and Markets Authority and other regulators in the bloc.
"In addition, ESMA should indicate suitable phase-in periods for the progressive implementation of that requirement," the draft said.
