The results of Britain’s separation from the European Union showed on the first trading day of the year that much of the volume of transactions in EU shares moved from London to locations in Amsterdam, Paris and the continent’s other financial centers.
Britain’s accession to the EU has meant that banks and investors in the region could avoid stock exchanges such as Paris-based luxury goods giant LVMH Moët Hennessy Louis Vuitton SE and Just Eat Takeaway.com NV, the company’s large food delivery and trades them in London through alternative locations. These locations included Turquoise, a trading facility owned mostly by London Stock Exchange Group PLC and rival platforms Aquis Exchange PLC and Cboe Global Markets Inc., based in Europe.
But with the entry into force of the Brexit trade agreement on 1 January, this option is over.
The bloc has pressed for greater control over the trading of EU shares during the Brexit negotiations, as part of its efforts to compete better with London, Europe’s dominant historical financial center.
The trading venues had been prepared for the change in the trading volume of post-Brexit shares. Turquoise LSE, for example, set up a European hub in Amsterdam at the end of November to trade European equities. Cboe also has a hub in Amsterdam. Aquis operates a platform in Paris for the same reason. While operations therefore seem unlikely to suffer, at least in the short term, volumes leaving London send a signal that other urban centers can compete effectively and support comparable services without hiccups.
LSE declined to comment on the trading volume of its Turquoise platform in Amsterdam on Monday. For Cboe, about 90% of its European stock trading volumes moved to its Amsterdam platform on Monday. Prior to that, the entire volume had been treated in London. In the case of Aquis, almost 100% of its European stock volumes moved to its Paris operation. This exceeds the minimum amount, when the UK was still part of the EU.
“It was an overnight transition business,” said Belinda Keheyan, head of marketing at Aquis.
Britain’s split with the EU has already triggered a £ 1.2 trillion outflow of assets, the equivalent of about $ 1.6 trillion, of assets to mainland Europe since the 2016 Brexit vote and forced banks, exchange operators foreign exchange and other financial institutions to move hundreds of employees 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 too early to determine whether European domestic stock markets will generate significant gains in the volume of transactions on those exchanges as a result of the change in activity on the continent. This is reflected in the market share data of the various operators. For example, Deutsche Börse’s Xetra trading volume currently accounts for about 14.4% of the total volume in European markets, according to Cboe, which tracks the data. It rises from an average daily rate of 13.9% in December. However, the market share of the Spanish Bolsa de Madrid and the European platforms Euronext NV, including those in Amsterdam and Paris, are currently lower than their December averages.
The change in trading volumes in EU shares coincided with the weakness of the pound, which traded 1.5% lower against the euro.
Jane Foley, head of Rabobank’s foreign exchange strategy, said that while the change in the trading venue could be heavy, news of the spread of Covid-19 and vaccinations against it hides any impact.
“Maybe this year it could become a little more obvious,” said Ms. Foley. “We need a longer period to really analyze the imperial factors. It is quite difficult to figure out which factors are pulling in any direction. “
An agreement between the UK and the European Union took place at the end of December, days before the end of the year, giving the UK significant freedom to move away 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 at [email protected]
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It appeared in the print edition of January 5, 2021 as “The EU stock transaction changes from the UK after the Brexit transaction”.