The London Stock Exchange has fired back at Brussels' proposal to restrict London's ability to host euro-clearing, warning that any restriction on the clearing of Euro swaps would "damage European issuers, savers, investors, pension funds and intermediaries".

The highly lucrative euro-clearing market has been the subject of a deepening debate between Europe and the UK ever since Britain voted to leave the European Union, with politicians on the continent arguing that EU derivatives should be cleared in the EU rather than London post-Brexit.

The European Commission will present reforms on derivatives clearing later this week in a bid to simplify rules where "immediate action is necessary", according to sources, with a draft of the proposals leaked to the Financial Times pointing to measures that could force UK firms to relocate or be subject to EU rules.

Britain is home to some of the world's largest clearing houses, which act as intermediaries between buyers and sellers of financial assets, including interest rate swaps, with LSE-owned LCH Group by far the biggest.

Speaking on behalf of the LSE, a spokesman said that while the exchange was "strongly positioned to adapt to any outcome from the debate", a restriction on euro-clearing could see Europe do itself damage by forming a "parallel less liquid, smaller onshore" market.