London has lost its long-held title of Europe’s largest share trading centre, after Amsterdam hoovered up business lost by the UK since Brexit last month.
Exchanges in the Dutch capital traded £8.07bn a day in January, more than London’s £7.54bn, according to figures from Cboe Europe exchange, which operates in both cities.
What’s caused it?
The symbolic shift has been driven largely by the EU saying it does not recognise UK exchanges as having the same levels of supervisory status as its counterparts in the Netherlands, France and Germany.
This has meant that following the end of the Brexit transition period, European companies have had to bring their share trading activity under the eye of regulators on the continent.
And US banks wanting to buy European stocks could no longer trade via London.
Can London come back?
The City of London is now fighting for the EU to recognise an “equivalence” deal which would mean recognition of the regulatory regime in the UK.
A memorandum of understanding is expected to be signed between the UK and EU over financial services in March.
London has also lifted a prohibition on trading of Swiss stocks which is currently banned on EU exchanges, and could make up losses in the near-term.
Does it mean job losses?
The shift is unlikely to see more jobs lost from the City of London, PA Media reports, but a number have already moved from the UK to Europe.
The Turquoise trading platform, owned by the London Stock Exchange Group, had already moved to the Netherlands, and follows around 7,000 jobs that have shifted in the financial sector from the UK to the EU since the referendum.
But tensions remain high between London and Brussels as banking regulators continue to thrash out a memorandum of understanding over future rules.
Did we know this was going to happen?
Pretty much. As soon as the UK voted for Brexit, the race was on to find the “new London” and Amsterdam was touted as a favourite within days of the referendum.
As such there’s been a sense of resigned frustration from some prominent Remainers, with Alastair Campbell saying Brexit is “making sure other countries prosper mightily”.
The BBC’s Robert Peston called the news “astonishing”.
What are the experts saying?
Bank of England governor Andrew Bailey warned on Wednesday evening that the UK would not be forced to follow EU rules to the letter and that sensible agreements over what constitutes “equivalence” were needed.
Giving the governor’s annual Mansion House speech to the City, he said: “The EU has argued it must better understand how the UK intends to amend or alter the rules going forwards.
“This is a standard that the EU holds no other country to and would, I suspect, not agree to be held to itself. It is hard to see beyond one of two ways of interpreting this statement, neither of which stands up to much scrutiny.”
He added: “I’m afraid a world in which the EU dictates and determines which rules and standards we have in the UK isn’t going to work.”
Bailey also warned that the UK should avoid becoming a low-tax, low-regulation country and said it would be a mistake for the EU would cut off London from its financial systems.
The governor said: “I can’t predict what will actually happen exactly because it’s not within our control, but I think we have to state the argument for why it’s important to have global standards, global markets and safe openness. And if we all sign up to that, there isn’t a need to go in that direction.”