Rivals Frankfurt and Paris have joined together in a bid to poach London’s euro clearing business after Brexit

LONDON — Rival lobby groups in Frankfurt and Paris have issued an unusual joint statement suggesting euro clearing, a lucrative business based in London, should be relocated to the EU after Brexit.

Frankfurt Main Finance and Paris Europlace are competing to attract financial firms from London after Brexit.

They issued a statement on Wednesday morning calling on European authorities to recognise the importance of operating euro derivative clearing within the jurisdiction of the European Court of Justice — which the UK is set to leave.

“The legal framework in which the CCP [a European clearing house] operates … should fall under the jurisdiction of the European Court of Justice,” said the statement. Prime Minister Theresa May has explicitly pledged to leave the European Court of Justice and described it as a “red line” on which she is not willing to compromise during Brexit negotiations.

Euro derivative clearing is a process which sends euro-denominated trades through a clearing house which holds collateral and guards the market against company defaults, with around 70% of trades running through London.

The statement said that, if a clearing house [CCP] collapses and requires a “resolution” — a process which means losses and capital have to be shared among its members — then EU authorities require the ability to act “in a way that shields European taxpayers from potential losses.”

Hubertus Väth, managing director of Frankfurt Main Finance, told Business Insider last week that in practice that would mean relocating CCPs to the euro zone after Britain exits the EU.

He said it would be “extremely difficult” for the European Central Bank to safeguard the interests of European banks and prevent them from taking outsized losses, because the Bank of England, as the domestic regulator, would prioritise UK financial stability.

“Frankfurt Main Finance and Paris Europlace urge the responsible European authorities to clarify their position without delay and by doing so, bolster certainty in this systemically relevant pillar of the European financial system,” the statement said.