Clean shift as euro share trading exits London for EU

London’s automatic access to EU financial markets comes to end

LONDON:

The biggest shift in European share trading in two decades was proceeding smoothly on Monday, on the first day of business since Britain left the European Union’s single market.

While a Brexit trade deal agreed last month set rules for industries such as fishing and agriculture, it did not cover Britain’s much larger finance sector, meaning London’s automatic access to EU financial markets came to an end on December 31.

That has meant the bulk of trading in euro-denominated shares has had to switch from London to the EU, as the bloc seeks to reduce its reliance on a finance centre outside its borders.

Many London-based businesses had prepared for the new conditions by setting up units in the EU, and Monday put those new arrangements to the test. Trading on Cboe Europe and London Stock Exchange’s Turquoise units in Amsterdam, and on Aquis Exchange’s new Paris platform, grew steadily on Monday morning, with no glitches reported.

Data from Cboe, Europe’s biggest cross-border share trading platform, showed that two hours after the open, 60% of all of its activity was at its Amsterdam unit.

“All our systems are operating normally, and as expected the majority of activity in EEA-symbols (mainly EU listed shares) is now taking place on our Dutch venue, with activity across all our market segments,” Cboe Europe President David Howson said.

“We will continue to work with clients to ensure a smooth transition over the coming days and weeks.”

Aquis reported a “clean shift” in euro share trading from its London base to its new Paris unit, with the French capital now the location for most of the group’s business.

Trading on Turquoise was roughly split between London and Amsterdam. No European trading of note had taken place on the three EU hubs until Monday.

Trading in non-EU listed shares remains in London.

“I don’t think there has been any impact from this switch,” said Keith Temperton, equity sales trader at Forte Securities. “It has been planned for years.”

Britain’s Financial Conduct Authority (FCA) and the EU’s European Securities and Markets Authority (ESMA) had no comment. Banks and other financial market participants in the EU are also required to trade swaps, a type of derivatives contract, on platforms inside the bloc and stop using venues in London, the world’s biggest centre for trading swaps.

Published in The Express Tribune, January 5^th, 2021.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.