A controversial plan by Brussels to force the clearing of trillions of euros in derivatives out of London and into the eurozone would backfire spectacularly, the boss of one of the world’s biggest clearing houses has warned.

The move would only affect a tiny proportion of British businesses, but prove very harmful for EU companies, according to Dan Maguire, chief executive of LCH Group, which cleared ­derivatives worth more than $850 trillion this year. The tussle for control of a serious chunk of the clearing market has emerged as one of Brexit’s key battlegrounds.

London is the focal point for clearing derivatives in the US dollar and the euro, but the European authorities want all activity in euros activity to take place within the EU after Brexit.

“There is discussion about forcing the relocation of euro-denominated clearing by EU-based clients to within the EU only. This covers only 7pc of LCH’s total cleared volumes and we could still serve these customers as we are a global business with EU-based clearing houses,” he said.

“However, the impact of denying EU-based clients access to the global liquidity pool for euros would simply be to grant them access to a much smaller and restricted liquidity pool, inevitably making it more expensive for the EU clients, end users and real money users of swaps.

“Furthermore, the forced fragmentation of a safe, efficient and well functioning market also risks damaging financial market stability.”