UNITED KINGDOM. London: London has lost the crown of largest financial trading centre in Europe. Last month, so since Brexit rules came into force, an average of €9.2bn shares a day were traded on Amsterdam, against the €8.6bn in London.
Due to the new post-Brexit regulations, EU-based financial institutions can’t trade in London because the EU “has not recognised UK exchanges and trading venues as having the same supervisory status as its own,” The Financial Times reports.
The EU and the UK are working towards a March deadline to find an agreement under which both sides would recognise the other’s regulations.
According to the FT, as soon as the Brexit transition period ended last year, there was a shift of €6.5bn of deals to the EU.
Amsterdam’s rising star
Amsterdam, home of the world’s oldest stock exchange, was previously the sixth largest exchange centre in Europe, and it saw a trading increasing from €2.6bn (£2.3bn) to €9.2bn in January.
London holds now the second place; according to data released by CBOE exchange.
According to FT, Intercontinental Exchange is also looking “to move the €1bn-a-day carbon emissions trading market to the Netherlands, although clearing will remain in London.”
The loss for London is low at this stage
London has responded by allowing the treading of Swiss stocks, such as Nestlé and Roche which are banned on EU exchanges.
So far, only a few jobs at the exchange had to leave the City; since the 2016 referendum, around 7,000 financial sector jobs have been moved from the UK to other EU hubs. However, these numbers are less than they initially expected 50,000 losses.
The Guardian reports that only around 20% of Britain’s financial services industry involves EU clients and euro operations.
Thus, even if 50% of EU- related business moves from the City, that would cut just 1% of the “£76bn contributed by the industry to the UK Treasury last year.”
Future perspectives for the City
EU share trading could return to London if the UK and the bloc find an agreement on financial services.
The Bank of England shared on Twitter: “Andrew Bailey looks at the benefits of a global financial system, and talks about the UK’s current and future role in it.”
In his speech, Mr Bailey, Governor of the Bank of England said: “The EU has argued it must better understand how the UK intends to amend or alter the rules going forwards.
“This is a standard that the EU holds no other country to and would, I suspect, not agree to be held to itself. It is hard to see beyond one of two ways of interpreting this statement, neither of which stands up to much scrutiny.”
He also added: “This co-operation [between UK and EU] will be supported by a Memorandum of Understanding to be agreed by March, and this will enable discussions on how to move forwards on equivalence determinations ‘without prejudice to the unilateral and autonomous decision-making process of each side’.”