Status: 02/11/2021 6:03 p.m.
As a result of Brexit, London lost its traditionally leading role in European equity trading to Amsterdam in January. Last year it looked very different.
Amsterdam overtook London as Europe’s largest trading center for stocks last month because numerous investors outsourced trading to the Amsterdam-based Euronext exchange platform after Great Britain left the European Union. The daily trading volume on Euronext Amsterdam, including the futures exchanges CBOE Europe and Turquoise, averaged 9.2 billion euros – four times more than in December.
In contrast, the volume in London fell to EUR 8.6 billion, according to data from CBOE Europe, so that London had to give up its historic position as the most important hub for equity trading in Europe. Paris follows in third place with a good six billion, Frankfurt just behind with 5.8 billion.
The main reason for the move to the continent was that banks from the EU are no longer allowed to trade in shares in London, as Brussels no longer recognizes the British financial regulator since Brexit. This resulted in an immediate shift of 6.5 billion euros of business to the EU in January. That corresponds to about half the volume of business that London banks and brokers did the day before.
Warned of negative consequences
The financial center of London had long warned of the negative consequences of Great Britain’s exit from the EU internal market. Exchange officials suggest that the shift in trade flows from London to Amsterdam is likely to be permanent as the EU insists that stocks quoted in euros must be traded in the EU.
London hopes to compensate for a small part of the losses with trading in Swiss francs quoted shares, which resumed this month. On average, 250 million euros change hands every day, which should move back towards a billion – to the level before the end of trading in Swiss shares in London in June 2019. Since then, Switzerland and the EU have not recognized each other more on.
Frankfurt in fifth place
According to analysts and bankers, lower stock trading in London is unlikely to result in the loss of thousands of jobs initially. The British tax authorities will have to be prepared for significant failures. Financial services generated nearly £ 76 billion in tax revenue last year, according to the Financial Times.
For the year as a whole, however, the British were still clearly in first place with an average trading volume of 17.5 billion euros per day in 2020, while Frankfurt took second place with 5.9 billion euros. Amsterdam only made it to sixth place with 2.6 billion.