March 22, 2023
London’s Days as Stock Trading Hub of Europe are Numbered

Crypto Engine is a crypto trading tool for investing in the crypto market with an %88 average win rate on trades and is the #1 trading software for crypto traders from all around the globe in 2022. Try it For FREE Today. 

As Brexit draws closer, London has to confront the loss of its role as the undisputed stock-trading hub of all of Europe, which means it is going to lose billions of euros in daily trading. Nearly half of the trading volume in London is contributed by shares of companies in the European Union. According to the data, this will migrate to the EU if there is no breakthrough in the negotiations. Not only will the city lose face, but the biggest loss would be for the investors because they will have to put up with worse prices due to the more splintered trading. 

A top international official at the Financial Conduct Authority in the UK, Nausicaa Delfas, said that investors in the European Union and the United Kingdom will both suffer because they will not be able to enjoy the best execution within the most liquid market. More than half of all the shares that are traded in the United Kingdom are contributed by companies based in the 27 countries of the European Union. In the month of August, this averaged $8.5 billion or 7.2 billion euros, which is approximately 60% of the equities that changed hands on a daily basis. This is about 12.5 billion euros. 

In order to maintain the existing status quo, they need a finding by the European Union, referred to as ‘equivalence’, which determines that regulations in the U.K. are just as robust as that of the bloc. If this can be done, then traders in the EU will be able to buy and sell shares in the London stock market. However, as the Swiss have learned, this is far from certain. Last year, Switzerland was the country where the European Union withdrew equivalence, which means that EU-listed securities couldn’t be traded in the country. 

In retaliation, Switzerland banned trading of Swiss shares on European Union venues. There was an increase in volume in Zurich, but there was also a 20% increase in the trading costs for small and mid-cap equities in the country, soon after the EU stopped acknowledging SIX Swiss Exchange AG. Some of the experts have said that they are concerned for the industry and it is a given that investors are also worried of what the outcome will be. Experts believe that it is a political move and could end up making the markets worse. There is a possibility that 30% of the trading, which is currently done in London markets, could be shifted to the bloc. 

The United Kingdom hasn’t yet discussed its policy for whether traders in the country will be demanded to trade U.K. or any other shares within Britain. Analysts said that they were ready for any scenario, but it is certainly not something they were hoping for. The biggest lobby group in the region for both investors and brokers in the capital markets, the Association for Financial Markets in Europe is pushing both sides to come to an agreement. The head of equities and managing director of the AFME said that EU investors will be denied access to pools of liquidity, which could be a problem.

trade now

Altcoin Directory is not responsible for the content, accuracy, quality, advertising, products or any other content posted on the site. Some of the content on this site (namely Branded Content Posts) is paid content that is not written by our authors and the views expressed do not reflect the views of this website. Any disputes you may have with brands or companies mentioned in our content will need to be taken care of directly with the specific brands and companies. The responsibility of our readers who may click links in our content and ultimately sign up for that product or service is their own. Cryptocurrencies, NFTs and Crypto Tokens are all a high-risk asset, investing in them can lead to losses. Readers should do their own research before taking any action.

Leave a Reply

Your email address will not be published. Required fields are marked *

Only $250 and you're Rich - Simple way to make $1,372/Day Learn More
Skip to content