Brexit: Amsterdam surpasses London as Europe’s leading share trading hub

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Andrew Feinberg

White House Correspondent

Amsterdam has surpassed London as Europe’s leading share trading hub in the wake of Brexit.

An average €9.2bn shares a day were traded on Euronext Amsterdam and the Dutch arms of CBOE Europe and Turquoise in January, according to data from CBOE Europe first reported by the Financial Times.

EU-based financial firms are banned from trading in London because the EU has not recognised UK regulations on exchanges as equivalent to its own.

The change prompted €6.5bn (£5.7bn) of daily transactions to move from the UK on 1 January – around half of London’s European share trading business.

Billions of pounds of derivatives trading have also moved from London and other European financial centres to New York this year, separate research by IHS Markit showed.

Bank of England governor Andrew Bailey warned on Wednesday evening that the UK would not be forced to strictly adhere to EU rules after Brexit.

It would be “unrealistic” and “dangerous” for the EU to try to enforce complete alignment, Mr Bailey said, as he called for a sensible approach from Brussels.

A memorandum of understanding is set to be reached on regulation of banking, insurance, asset management and other financial services business between the EU and UK by the end of March.

Fears are growing in the City that the EU will attempt to wrest lucrative financial services business from the UK by taking a hard line on those agreements.

Giving the governor’s annual Mansion House speech to the City, he 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 added: “I’m afraid a world in which the EU dictates and determines which rules and standards we have in the UK isn’t going to work.”

Mr Bailey also warned that the UK should avoid becoming a low-tax, low-regulation country and said it would be a mistake for the EU to cut off London from its financial systems.

The governor said: “I can’t predict what will actually happen exactly because it’s not within our control, but I think we have to state the argument for why it’s important to have global standards, global markets and safe openness. And if we all sign up to that, there isn’t a need to go in that direction.”

Wranglings over banking and finance came as a survey found that half of British exporters to the EU are reporting difficulties with Brexit red tape and border disruption.

The British Chambers of Commerce (BCC) said companies cited concerns about increased administration, costs, delays, and confusion about which rules to follow when asked how they were coping with the new system.

BCC director-general Adam Marshall warned that the UK’s hopes of a strong economic recovery from the coronavirus pandemic had been “hit hard by changes at the border”.

“The late agreement of a UK-EU trade deal left businesses in the dark on the detail right until the last minute, so it’s unsurprising to see that so many businesses are now experiencing practical difficulties on the ground as the new arrangements go live,” Mr Marshall said.

The prime minister’s official spokesperson said: “The UK exchanges remain some of the biggest and deepest in the world and we continue ... to believe in open global markets and firms’ ability to choose where to trade.

“Despite the fact that we’ve supplied all of the necessary paperwork and are one of the world’s most preeminent financial centres, with a strong regulatory system, the EU still haven’t granted us full equivalence.

“This has meant that a number of EU shares that were previously traded on UK venues have moved to the EU venues on advice of the European regulator.

“But our position is that fragmentation of share trading across financial centres is in no one’s interest. So we remain open to discussions with the EU about this.”