London ousted as Europe's share trading capital

The effects of Brexit resulted in Amsterdam overtaking London last month as Europe’s largest share trading centre.

David Sapsted

11 February 2021

The Financial Times reported on Thursday that €9.2 billion shares a day were traded on Euronext Amsterdam during January, an increase more than four times greater than the volume in December. Meanwhile in London, the volume in London tumbled to €8.6 billion a day."Though the economic hit from the loss of trade volumes will be small, with the process involving extremely low margins, it represents a symbolic moment," commented City AM. "The lack of an equivalence deal in the UK’s departure agreement with the EU is behind the shift."That last-minute agreement between the UK and EU, reached on Christmas Eve, had no provision for services and it is now up to Brussels to decide whether or not to grant equivalence to the UK's financial services sector.Andrew Bailey, the governor of the Bank of England, has accused the EU of demanding tougher standards of Britain's finance industry than it has required from Canada, the US, Australia, Hong Kong and Brazil, which have all been granted equivalence by Brussels.That was despite the UK starting off from a position of following the same rules as the EU, unlike those other countries, Mr Bailey said in an online speech to bank bosses.He added that the EU wanted to "better understand how the UK intends to amend or alter the rules going forwards". But Mr Bailey said: "This is a standard that the EU holds no other country to and would, I suspect, not agree to be held to itself."Although Amsterdam overtook London in share dealing last month because of the equivalence impasse, many in the UK financial sector believe that the absence of a deal could help the City appeal to more global destinations, including Hong Kong and Singapore.Barclays boss Jes Staley last week said that a more global outlook would be to the benefit of London.Anish Puaar, market structure analyst at Rosenblatt Securities, told the Financial Times: “It’s symbolic in that London has lost its status as the home of EU share trading, but it has a chance to carve out its own niche on trading.“Fund managers will be more concerned with availability of liquidity and the costs of placing a trade, rather than whether an order is executed in London or Amsterdam.”It is not only the financial sector feeling the effects of Brexit. A survey of 1,000 businesses by the British Chambers of Commerce (BCC) on post-Brexit trade found that 49 per cent of  exporters were experiencing difficulties in adapting to the changes in the trade of goods with the EU.Adam Marshall, BCC director-general, said: “Trading businesses – and the UK’s chances at a strong economic recovery – are being 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."