Securities markets and banks breathed more easily in March when the EU's second highest court ruled that the bloc's single market should, er, stay single.
The European Central Bank has no power to force clearing houses that handle large volumes of euro-denominated securities to be located inside the 19-country single currency area, the Luxembourg-based court said.
Ruling the other way would have had profound consequences for trading in Europe.
"If the EU court would have decided that euro clearing houses can't be located in London, that would have been a major upheaval for all the industry," said Christian Voigt, senior regulatory advisor at Fidessa.
Britain had challenged the ECB policy in the court, arguing that if it went ahead that would be the end of the single market in capital, whereby a clearing house like LCH.Clearnet which authorised in one EU state, in this case Britain, can serve customers anywhere in 28-country bloc.
Lawyers predicted a two-tier Europe if non-euro zone member Britain lost. Integration would have deepened in the currency area under the ECB, which is already the zone's banking supervisor, with supervision of securities markets next, they said.
LCH.Clearnet has operations in euro zone member France but moving its large SwapClear operation to Paris would have been a costly multi-year project.
The win for Europe's biggest securities market will come as a relief to Brussels as well; just days before the court judgement, it launched plans for a pan-EU capital markets union (CMU), signalling its intention to finish the job of creating a truly single capital market that was started with the EU's forerunner in 1958.
"Putting in place the CMU would then have been much harder," Voigt said.
A London out on a limb would have scuppered Brussels' plans for a more joined up stock, bond and private placements market to raise cash for companies to grow as banks retrench under a welter of tougher capital rules.
True, the European Commission is downplaying expectations of a "big bang" switch in continental Europe to an equity culture more akin to the United States. There's no president, building or anthem, said Jonathan Faull, the top EU civil servant in charge of the project.
Nevertheless, it has the potential over time to generate bigger trading volumes on markets if policymakers persevere in persuading more companies to list on stock markets, raise additional money on corporate bond markets or go directly to pools of rich investors.
Brussels wants two quick wins -- making it cheaper for banks and investors to create and buy simple, high quality asset-backed securities, and cutting the cost and red tape for small companies to go public.
CMU also aims to tackle other old chestnuts: the lack of a consolidated tape for stock prices in Europe.
"Should market led efforts prove to be insufficient to deliver a consolidated tape ... consideration may need to be given to other solutions, including entrusting the operation of a consolidated tape to a commercial entity," the CMU discussion paper says.
But it's not just future hopes a UK defeat in the EU court would have blown off course; laws already approved would have faced a tricky time too.
Take the bloc's new rules for derivatives markets which include "open access" to allow competition in clearing trades, otherwise dubbed the "vertical silo" killer as it should, eventually by 2020 and beyond make it harder for exchanges to trap trades for clearing as well as trading.
A ruling the other way in Brussels would have forced clearing houses in London to chose where to locate as few could afford to run major centres inside and outside the euro zone.
The CMU plans also broach issues that have proven intractable in the past, such as tax and insolvency law harmonisation to encourage more cross-border share trading: everyone wishes Brussels good luck on those after the 15-year old Giovannini Report failed to make much headway in tearing down these barriers.
Therefore, the court ruling means that plans to implement new EU securities and trading laws like MiFID II and EMIR can go ahead without a big question mark and hopes for CMU remain highish as long there are early deliverables.
The ruling only considered if the ECB has the power to implement the clearing house policy, saying it would be up the EU to legislate such a power into law. The ECB may be back in its box for now, as one banker put it, but few doubt it wants a role in securities supervision.
Watch this space, as they say in Frankfurt.
