The aftermath of the British split from the European Union was shown on the first trading day of the year as a large volume of transactions in EU shares moved from London to locations located in Amsterdam, Paris and other centers financial institutions of the continent.
Britain’s EU membership had meant that banks and investors in the region could skip home exchanges, such as Paris-listed luxury goods giant LVMH Moët Hennessy Louis Vuitton SE and Just Eat Takeaway .com NV, the big food distribution. company and change them in London for alternative places. These spaces include Turquoise, a majority-owned trading facility owned by the London Stock Exchange Group PLC, and rival platforms Aquis Exchange PLC and the European market of Cboe Global Markets Inc.
But with the Brexit trade deal that went into effect on January 1, that option is over.
The bloc pushed for greater control over trade in EU stocks during the Brexit negotiations as part of its efforts to better compete with London, historically Europe’s dominant financial center.
The trading venues had been prepared for the post-Brexit change in the volume of EU securities trading. For example, Turquoise of the LSE, in late November, set up a European center in Amsterdam to trade in European stocks. Cboe also has a hub in Amsterdam. Aquis operates a platform in Paris for the same reason. While operations are unlikely to suffer, at least in the short term, volumes leaving London send a signal that other centers in the city can compete effectively and support comparable services without problems.
The LSE declined to comment on the trading volume levels of its Turquoise platform in Amsterdam on Monday. For Cboe, approximately 90% of its European stock trading volumes had moved to its platform in Amsterdam on Monday. Earlier, all this volume had been managed in London. In the case of Acquis, about 100% of its European stock volumes had moved to its Paris operation. This exceeds a minimum amount when the UK was still part of the EU.
“It’s been an overnight transition business,” said Belinda Keheyan, head of marketing at Achis.
The UK’s split with the EU has already triggered a £ 1.2 trillion outflow, equivalent to $ 1.6 trillion, of assets in continental Europe since the 2016 Brexit vote, and has forced banks, exchange operators and other financial institutions to move hundreds of employees and expand or establish new offices in Frankfurt, Paris and other European cities.
A messaging service for food at Just Eat Takeaway.com in London
Photo:
Hollie Adams / Bloomberg News
Officials on some stock exchanges say it is too early to determine whether Europe’s national stock markets will generate significant gains in trading volume on their respective stock exchanges as a result of the shift in activity to the continent. This is reflected in the market share data of different operators. For example, the trading volume of Deutsche Börse’s Xetra stock exchange currently accounts for approximately 14.4% of the total volume of European markets, according to Cboe, which tracks the data. This exceeds an average daily share of 13.9% in December. However, the Spanish market share of the Madrid Stock Exchange and that of the European platforms of Euronext NV, including those in Amsterdam and Paris, are currently lower than the December averages.
The change in trading volumes of EU stocks coincided with the weakness of the pound, which was trading 1.5% below the euro.
Jane Foley, head of Rabobank’s exchange strategy, said that while the change in the trading venue could weigh on the pound, news of the spread of Covid-19 and vaccines against it obscures any impact.
“Maybe over the course of this year this could be a little more obvious,” Ms. Foley said. “We need a longer period to really examine the prevailing factors. It’s pretty hard to figure 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 great freedom to move away from EU law. 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 to [email protected]
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It appeared in the print edition of 5 January 2021 as “Change of EU values from the UK after the Brexit deal”.