MARKET NEWS

BY  Oscar Williams-

Amsterdam ousts London as Europe's top stocks hub

Amsterdam overtook London to become Europe's biggest share trading centre in January.The city has benefited from Brexit forcing European Union investors to use platforms inside the bloc.Exchanges in the Dutch capital traded over $11 billion a day in January.Just ahead of London's 10.4 billion dollars.That's according to figures from Cboe Europe exchange, which operates in both cities.It compares with an average of over 20 billion dollars traded daily in London during 2020.The rise of Amsterdam was well flagged ahead of Britain's departure from the EU.Share platforms began preparations for opening hubs in the Dutch capital in 2016.The EU had been clear it wanted euro-denominated financial activity shifted from London to build up its own capital market and have direct supervision.Some derivatives trading has also moved from London to Amsterdam.And trading in EU carbon emissions will move to the Dutch city later this year.

Amsterdam has overtaken London as the share trading capital of Europe, just a month after Brexit became official.

The Financial Times reported on Thursday that share trading volumes on three exchanges in the Dutch city grew by fourfold to average €9.2bn (£8bn, $11bn) per day in January. At the same time, average volumes in London fell sharply to €8.6bn last month.

The symbolic shift was prompted by a ban on EU-institutions trading in London post-Brexit. Authorities in Brussels have not recognised the regulatory regime in London, forcing European companies to bring their share trading activity under the eye of regulators on the continent.

British-based companies can still trade EU shares in London, but European companies must now trade these stocks on venues based in the EU. The ban is believed to affect around 21 companies with London listings.

An estimated â‚¬6bn of European share trading shifted from London to Europe on 1 January when Brexit officially took effect.

Cboe Europe, which runs a Dutch exchange, said on Thursday it had seen record volumes on its Amsterdam-based exchange in January “following a successful transition of activity in EU-listed securities post-Brexit.” Average daily net volumes on Cboe’s Dutch exchange rose from just €300m in December to €4.9bn last month. Volumes on Cboe Europe’s block trading platform — which caters to large institutions — rose by 58%.

Bill Blain, a market strategist at Shard Capital, said the impact on the UK’s financial services industry would not be as seismic as the headline numbers suggested.

“That’s where the trades are getting matched,” he said. “Where the money is being made is in the ideas behind making these trades. That’s largely still happening in London.”

The City of London is now battling for so-called “equivalence” rulings from the EU, which would allow it to win back business from the continent. Equivalence judgements certify that local rules are on a par with EU standards. Judgements would allow UK-based companies to conduct business across Europe without having to set up local offices.

Many in the City fear political considerations will cloud the EU’s judgment. Brussels has publicly said it wants to grow its own internal financial capabilities and there are concerns the EU could withhold equivalence as a means of pushing business out of the UK and into Europe.

Andrew Bailey, governor of the Bank of England, urged the EU to grant equivalence to the UK in a speech on Wednesday evening.

“The public goods of open economies, an open financial system and the stability of that system are global, not regional, in nature,” he said. “The UK is one of the world’s largest global financial centres, and its financial stability – as the IMF have reminded us – is therefore a global public good.”

The EU is not expected to rule on equivalence until the second quarter of this year at the earliest, with many experts predicting little progress until later in the year.