UK government complacent as Europe launches new raid on London
Hundreds of billions of trading in euros is settled in London every day.
A clearing house is an enormous middleman standing between buyers and sellers from all over the world. The economies of scale of this vast trading pool save customers from around the world tens of billions in cost every year and, according to a report by consultants EY, support over 80,000 direct and indirect UK jobs.
And yet, the UK government is doing little to fend off competition for this lucrative prize. That's according to Jeff Sprecher, the chief executive of Intercontinental Exchange or ICE which owns the New York Stock Exchange and has spent billions building trading platforms in London.
Speaking exclusively to the BBC he said: "Countries around Europe are trying to attract us to move our business out of London - they are offering relocation packages, low tax rates, light regulation - you name it.
"At the same time President Trump is asking us how he can help us grow our business. Those conversations are not going on here (in the UK). As a business leader here, I wish I had a better relationship with government. Just to hear the words 'we want your business, we want you to stay here', but that's not happening at the moment."
Foreign governments are not just using a carrot to attract people like Jeff Sprecher. A new raiding party from the European Commission will brandish a stick today to try and forcefully snatch this business.
The European Commission will propose today that firms deemed systemically important to the stability of the EU financial system could be required to accept direct oversight by the EU authorities, or be forced to move their euro-clearing operations to a location inside the EU.
The prospect of EU authorities having direct supervision of some of the London Stock Exchange PLC's (LSE) most important business is unappealing. The forced removal of jobs and revenue from London is even more unappealing.
Sir Michael Spencer, the chief executive of NEX Group and former chairman of ICAP, a big player on world exchanges, was characteristically direct. He described this approach as "a shabby attempt at a land grab dressed up as concern over financial stability".
He described euro clearing as "a trophy" that France in particular has always been keen to land as a result of Brexit.
The LSE insists that the real threat to financial stability would come from fragmenting a market that was working efficiently and had proved itself robust enough to survive the worst the financial crisis could throw at it.
Consultants Claris have estimated that the users of London clearing could pay 77bn euros in extra cost if current economies of scale were lost. Deutsche Boerse - which owns a much smaller competitor, Eurex - estimated the cost at less than 10bn euros. Both of them would say that wouldn't they?
A fight between the EU and London over the cost and merits of disrupting the current set-up could result in neither winning.
There is another option out there - with sufficient scale, capacity and expertise to pick off this lucrative business - New York. One exchange group, CME, has already retreated from Europe and London back to the US and Jeff Sprecher of ICE described his rival's move as "the canary in the coalmine".
In the end, it may be that a costly, mutually destructive war can be avoided and some kind of joint oversight deal agreed.
If this early skirmish can be settled peacefully, financial institutions will breathe a sigh of relief, may come to see it as a model for future dispute resolution and will hope that the rattling of sabres is enough to prod the UK government into caring a bit more about some of its financial crown jewels.