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The
Brexit share trading exodus
On 4 January 2021 as the Brexit transition period came to an end , € 6 billion of trading volumes left London . Annabel Smith examines the impact of this and asks what the future holds for the industry .
In the final weeks of 2020 , it was apparent that no agreement on equivalence was likely to be reached between the United Kingdom and the European Union with regards to share trading .
The wholesale shift of liquidity that took place on 4 January , moving ¤ 6 billion in daily volumes away from the City to trading venues in European capitals such as Paris and Amsterdam , was shocking even to those who were most prepared .
UK based pan-European trading venues saw their market share in the trading of EU-listed names evaporate from 16 % to just 2.5 % in the first two weeks of 2021 following Brexit on 31 December .
“ Britain has ‘ taken back control ’ which is what I keep hearing politicians talking about , while Europe is actually taking back their markets ,” says
Alasdair Haynes , chief executive at London-based European equities exchange , Aquis .
According to a report by Liquidnet on 14 January , EMEA based trading venues saw their market share increase from 37 % to 48.5 %, while market share on off-exchange and systematic internalisers ( SIs ) increased significantly from 3 % to 49 %.
“ I think what was so extraordinary about Brexit was that we all felt that there would be a split in liquidity between European shares traded in the UK and traded in the EU . But on 4 January that didn ’ t come to pass ,” adds Haynes .
“ What happened is almost 100 % of the business moved to Europe . It was an extraordinary moment for the UK to watch something that they had been strong in , which is the trading of European shares , literally move over night .”
The EU and the UK have failed to reach
28 // TheTRADE // Spring 2021