Bye bye european share trading, and the associated loss of tax revenueLondon’s financial sector started to feel the full effects of Brexit on the first trading day of 2021 as nearly €6bn of EU share dealing shifted away from the City to facilities in European capitals.Trading in equities such as Santander, Deutsche Bank and Total moved to EU marketplaces or back to primary exchanges such as the Madrid, Frankfurt and Paris bourses, according to data from Refinitiv — an abrupt change for investors in London who have grown accustomed to trading shares in Europe across borders without restrictions.Business on London hubs for euro-denominated share trading, including Cboe Europe, Turquoise and Aquis Exchange, shifted to their new EU venues set up late last year to cater for the end of the Brexit transition. The volume amounted to a sixth of all business on exchanges in Europe on Monday.“It’s been an extraordinary day. Shifting liquidity is one of the hardest things to do. It’s not ‘Big Bang’ — it’s ‘Bang and It’s Gone’. The City has lost its European share business,” said Alasdair Haynes, chief executive of Aquis Exchange.Although not the City’s most lucrative business, the departure of the share trading will mean less in tax receipts for the UK government. Mr Haynes also noted that it could encourage companies to list in the EU to benefit from smoother, more active trading conditions.Cboe Europe said 90 per cent of its EU flows, more than €3.3bn worth of deals, were now in Amsterdam, compared with very little last year. Aquis said “virtually all” euro-denominated share trading had shifted to Paris overnight. Turquoise, controlled by London Stock Exchange Group, also had most of its EU business transition to Amsterdam. Very little business traded on the venues before the transition period ended.
Matt Palmer ● 1939d