According to a report by the Financial Times, almost €6 billion of EU share dealing was moved away from London on Monday as the unavoidable changes brought on by Brexit forced equities trading to tilt towards EU cities.
Equity trading for the likes of Deutsche Bank, Santander and Total moved to exchanges in mainland capitals – primarily Madrid, Paris and Frankfurt. The Euro-dominated share trading hubs in London, including Cboe Europe, Aquis Exchange and Turquoise, moved to newly established venues in the EU. The volume added up to about a sixth of all equity business on European exchanges on Monday.
One day post-Brexit and trading trends already show a move of almost €6 billion worth of shares to new EU hubs.
This is a rather abrupt change for London investors, who were previously able to trade shares in Europe across borders without restrictions. This new reality means that EU-based banks and asset managers will now be required to use a platform inside the bloc for Euro share trading.
This move of equity trading is only one of many effects that Brexit is expected to have on London markets. The Brexit deal which was brokered before Christmas does not account for access to financial market, and that is because EU regulators have refused to accredit most of the UK’s regulatory systems as “equivalent” to its own.
However, some temporary measures were put in place before the exit to allow UK financial firms to use venues in the EU.
The FCA said in a statement:
“the FCA continues to view the agreement of mutual equivalence between the UK and EU as the best way to avoid disruption for market participants and avoid fragmentation of liquidity in DTO products.” The FCA has also said that by 31 March it will consider “
whether market or regulatory developments warrant a review of our approach.” It was reported on Monday that EU regulators rescinded the registration of six UK-based credit rating agencies and four UK trade repositories. This means EU companies must now use EU-based entities for information on derivatives and securities financing trades.
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