Image copyright Getty Images Image caption London is the world leader for clearing all types of currency-denominated derivatives

The European Central Bank has put forward a proposal to boost its oversight over euro clearing.

The legal amendment would give it a "significantly enhanced" role in regulating the lucrative market.

London currently processes most of the trade in this financial sector, providing thousands of jobs.

The ECB's proposal comes shortly after the European Commission published a draft law to give it the power to move euro clearing business out of London.

Clearing is where a third party organisation acts as a middleman for buyers and sellers of financial contracts tied to the underlying value of a share, index, currency or bond.

Trillions of euros are handled through clearing houses every year, mostly through London.

The ECB said the amendment would give it "clear legal competence" in the area of central clearing, which is currently dominated by London firms.

Under the proposal, the ECB and its national central banks would monitor risks that could affect monetary policy, the operation of payment systems and the stability of the euro.

Image copyright PA

Analysis: BBC economics correspondent Andrew Walker

Outside the financial world, clearing houses are a little known but important part of the "financial infrastructure" to use the phrase that appears in the key piece of EU legislation.

The European Commission has already called closer supervision for euro clearing that takes place outside the EU and the ECB's proposed rule change would give it the power to take on that role.

For the firms that use these clearing houses, the ECB's watchful eye is something they could live with.

What they don't want is a requirement to have euro denominated business decamp out of London.

They have to put money up front to use these facilities and they can use it more efficiently that if it's not dispersed in many different places.

Daniel Hodson of the Financial Services Negotiation Forum told the BBC that at the moment the ECB did not have sovereignty over euro clearing in London, as its UK regulator - the Bank of England - is responsible.

However, there are "substantial" arrangements in place with the ECB that are "very similar" to those in place with US regulators for dollar clearing, he said.

"There is no economic reason for changing this well-developed and thought out established framework, adapted as appropriate post-Brexit," he said.

"There is a strong argument that to try to move substantial amounts of London based euro clearing business into the eurozone would actually create more systemic risk than it would offset," he added.

The move comes after the European Commission put forward reforms that would impose stricter supervision of the euro derivatives market and could force operators to leave London as a result of Brexit.

At the moment London is the world leader for clearing all types of currency-denominated derivatives including the euro.