LONDON (Reuters) - Forced relocation of euro-denominated clearing from London to the European Union after Brexit would harm the bloc, and the focus should be on increasing cross-border supervision, LCH (>> London Stock Exchange) said on Wednesday.

LCH, part of the London Stock Exchange, clears the bulk of euro-denominated derivatives in Europe.

The EU is due on June 13 to say whether this activity should be shifted to an EU state after Britain leaves the bloc in 2019.

LCH Group Chief Operating Officer Daniel Maguire said the clearing house, which stands between two sides of a trade to ensure its smooth completion, is already directly registered and supervised in many countries. It has a clearing house in Paris.

Brussels is looking at several options, such as forced relocation or an EU role in directly supervising LCH in London where it is regulated by the Bank of England.

Maguire said it was very encouraging that the so-called "enhanced supervision" option was on the table. "For global markets it makes sense to move towards more enhanced oversight," he told a Futures Industry Association (FIA) conference.

There was talk among delegates at the event that Brussels was leaning towards caps on the volume of euro-denominated clearing that could take place outside the bloc without relocation.

Maguire referred to a recent speech by Christopher Giancarlo, acting head of the U.S. Commodity Futures Trading Commission, who said the United States could still supervise clearers in London that handle dollar-denominated securities, despite an ocean the size of the Atlantic between them.

"We should also think that the sea as big as the Channel is not too big for us to get across and ensure you have the same level of enhanced oversight," Maguire said.

"I definitely think there is a willingness to do that."

"We hope that over time there will be sensible debate, cooperation and discussion, and a conclusion that keeps markets together, which is to the advantage of the EU, and the real economy, clients, members, central banks," Maguire said

It did not make sense for a global currency like the euro to become "localised", he said.

This week the FIA warned that forced relocation of euro clearing would lead to a near doubling of the $83 billion (£64.3 billion) users currently set aside in case of contract defaults.

Eurex Clearing (>> Deutsche Boerse) in Frankfurt, which has said it was ready to handle relocated euro clearing, dismissed this figure.

"I think it's very far from a realistic number," Eurex Clearing CEO Eric Mueller told the conference.

He also cautioned against dismissing arguments put forward by the European Central Bank and others in favour of relocation.

"We as an industry need to find answers to the concerns, instead of just saying, you know it's not a good idea," Mueller said.

"We need to work with those constituencies to find answers... There is some understanding that things on the oversight angle have to change."

(Reporting by Huw Jones; Editing by Adrian Croft)

By Huw Jones