By Huw Jones
LONDON, Jan 18 (Reuters) - The European Union will extend permission for banks in the bloc to continue using clearing houses in London for a further three years from June, its financial services chief said on Tuesday.
Mairead McGuinness had already said last November that such permission, known as equivalence, would be extended for an unspecified period from June 2022, when it is due to expire, to give more time to shift clearing from London to the continent.
"We are now consulting member states on this draft equivalence decision, which will take the form of an implementing act. We envisage to propose an extension of the equivalence decision of three years - until end June 2025," a spokesperson for McGuinness said.
Brussels has sought to persuade banks in the EU to relocate clearing from operators like London Stock Exchange Group, whose LCH arm clears about 90% of euro-denominated interest rate swaps, to Deutsche Boerse in Frankfurt but with little success.
Failing to extend clearing permission beyond June risked disrupting markets.
Banks have warned that making the relocation of clearing mandatory would backfire, prompting the EU to look at potential "incentives" to voluntarily shift clearing.
McGuinness said that in coming weeks she would also launch a public consultation on measures to make the bloc an attractive clearing hub, and on the supervisory arrangement for EU central counterparties (CCPs).
"This public consultation will feed into a strategy on clearing to reduce in the medium term our over-reliance on UK CCPs," McGuinness' spokesperson said.
(Reporting by Huw Jones; Editing by Louise Heavens and Pravin Char)
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