Amongst all the controversies of Brexit, one of the most vexed is the impact on over-the-counter derivative clearing — in particular, whether Europe’s clearing market structure requires what is colloquially known as a “location policy”.

Recently, various media have reported that Europe’s top banks have been asked by the European Commission to justify why they should not shift clearing of euro-denominated derivatives from London to the EU. This appears to have prompted Andrew Bailey, the governor of the Bank of England, to make a statement to the Treasury Select Committee in which he set out the Bank’s position in no uncertain terms. EU attempts to encourage clearing of euro-denominated derivatives to migrate to the EU, the governor observed, would be “highly controversial” and something that the Bank would “resist very firmly”.