Brexit Share Trading Plans Modified By Cboe Following Regulator Clash

Advertisment

Cboe, the biggest cross-border share trading platform in Europe, has decided to offer trading in all shares in Amsterdam and London after a row between regulators over where the shares can be traded if the United Kingdom leaves the European Union on the 12th of April without securing a delay or a transition deal with Brussels.

Cboe said that if there is no deal, trading in Swiss and British securities will continue on its British platform, however, trading in European Economic Area instruments – essentially euro-denominated stocks – will discontinue and shift to Amsterdam.

Last Friday, Cboe disclosed: “In the event that this happens it is Cboe’s intention to re-introduce trading in European Economic Area instruments on its UK venue during 2019.”

Cboe stated that if ever there is a long delay to Brexit or that a deal is settled, it would not start up in Amsterdam until it is able to offer trading in all securities on both its Dutch and British venues, which is likely to push through later this year.

This signifies a shift at Cboe, which accounts for almost a fifth of pan-European share trading.

Last January, the president of Cboe Europe, Mark Hemsley, said that the exchange would only trade EEA stocks in Amsterdam, with Swiss and British shares limited to London.

He said that this would avoid dividing liquidity in euro, UK or Swiss shares between two centres which could negative on the prices.

Last month, ESMA, the markets watchdog of the bloc, surprised exchanges by declaring that if there is a no-deal Brexit, over 6,200 shares, including 14 British stocks, could only be traded on a platform that is inside the bloc.

The Financial Conduct Authority of the United Kingdom was outraged by what one exchange official described as a “land grab” by an EU keen to build up its capital market.

Exchange officials are now anticipating to see if the FCA will eventually hit back and rule that under a no-deal Brexit, UK and some European shares could only be traded in in the United Kingdom.

The revised Brexit strategy of the Cboe means that its customers across Europe have a venue to trade all shares.

Turquoise, the pan-European trading platform of the London Stock Exchange, has established a hub in Amsterdam, while rival Aquis Exchange settled for Paris.

The chief executive of Aquis Exchange, Alasdair Haynes, stated: “Up until now, we all believed we would be trading euro shares in Europe and UK and Swiss shares in the UK.”

Haynes added: “Ever since the ESMA share trading obligation (STO) and a potential STO from the FCA, which people think is highly likely to happen, then you are going to have to split liquidity.”

He continued: “This is extremely bad news for end investor, but politically, people want to fight for territory here.”