The effects of Britain’s split from the European Union showed on the first trading day of the year when a large amount of trading in EU shares moved from London to locations in Amsterdam, Paris and the other financial centers of the continent.
Britain’s membership of the EU meant that banks in the region and investors could bypass the stock market of stocks such as Paris-listed giant LVMH Must Hennessy Louis Vuitton SE and Amsterdam-listed Just Eat Takeaway.com NV, the largest food delivery company. . company, and trades it in London over alternative locations. These included Turquoise, a trading facility majority owned by the London Stock Exchange Group PLC, and competing platforms Aquis Exchange PLC and the European market of Cboe Global Markets Inc.
But when the Brexit trade deal goes into effect on January 1, the option ends.
The bloc has demanded greater control over the trading of EU shares during Brexit negotiations as part of its efforts to better compete with London, historically the dominant financial center of Europe.
Trading venues were ready for the move of EU stock trading to Brexit. The LSE turquoise, for example, set up a European hub in Amsterdam at the end of November to trade European shares. Cboe also has a center in Amsterdam. Aquis operates a platform in Paris for the same reason. While operations are unlikely to suffer from this, volumes leaving London are sending, at least in the short term, a signal that other inner cities can compete effectively and support comparable services without heel.
The LSE declined to comment on the trading volume of its Turquoise platform in Amsterdam on Monday. For Cboe, about 90% of its trading volumes in European equities moved to its platform in Amsterdam on Monday. Previously, all these volumes were handled in London. In the case of Aquis, almost 100% of its volumes of European shares were transferred to the Paris company. This rises to a minimal amount when the UK was still part of the EU.
“It was an overnight transition industry,” said Belinda Keheyan, head of marketing at Aquis.
The UK’s split with the EU has caused an outflow of £ 1.2 billion, equivalent to about $ 1.6 billion, to Continental Europe since the Brexit vote in 2016, forcing banks, stock exchange operators and other financial institutions to pay hundreds relocate and expand or set up new offices in Frankfurt, Paris and other European cities.
A Food Delivery Courier for Just Eat Takeaway.com in London
Photo:
Hollie Adams / Bloomberg News
Officials at some exchanges say it is still too early to determine whether the domestic stock markets in Europe will yield significant gains in their trading volumes due to the shift in activity to the mainland. This is reflected in the market share data of different operators. According to Cboe, which follows the data, the trading volume on Deutsche Börse’s Xetra exchange currently represents about 14.4% of the total volume across European markets. This is compared to an average daily share of 13.9% in December. However, the Bolsa de Madrid market share in Spain and that of Euronext NV’s European platforms, including those in Amsterdam and Paris, are currently below their December average.
The shift in trading volumes of EU equities coincided with the weak point in the pound, which traded 1.5% lower against the euro.
Jane Foley, head of foreign exchange strategy at Rabobank, said that while the change in the trading field could weigh the pound, the news of the spread of Covid-19 and the vaccinations against it was hampering the impact.
“Maybe it’s going to get a little clearer over the course of this year,” she said. Foley said. ‘We need a longer period of time to really examine the crucial factors. It is quite difficult to find out what factors are pulling in any direction. ”
An agreement between the United Kingdom and the European Union took place at the end of December, days before the deadline for the end of the year, which gave Britain considerable freedom to deviate from EU regulations and sign free trade agreements with other countries. Photo: Paul Grover / Press Pool (Originally published on December 24, 2020)
—Caitlin Ostroff contributed to this article.
Write to Ben Dummett by [email protected]
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In the print issue of 5 January 2021, ‘Trade in EU share transfers from the UK to the Brexit agreement’ appears.