The London Stock Exchange (LSE) is set to move part of its government bond trading to Milan ahead of Brexit.
A part of MTS Cash, the electronic government bond trading platform of the LSE, is set to return to Italy as part of the preparations of the exit of the United Kingdom from the European Union that is scheduled on March 2019. The said platform trades an average of €13.4 billion per day (£11.9 billion).
The move was originally reported by the Financial Times. It said that it would enable cross-border trading to be unaffected by a possible no-deal Brexit scenario.
London is considered as a major center for trading and clearing euro-denominated securities, howeveer, the European Union and the European Central Bank want to move it to the eurozone where they will be able to regulate it directly, given that the United Kingdom will not be a member state of the European Union starting March 2019.
MTS Cash was acquired by the LSE group when it bought Borsa Italiana, the only stock exchange of Italy, in 2007.
MTS started its operations as a partnership between the Italian Treasury and the Bank of Italy for banks to bid for bonds.
The government bonds of the United Kingdom will continue to be traded through the London wing of MTS, however, all of the European dealings would be moved to Milan.
Yesterday, a source who is close to the matter informed Reuters that the said move could be effective starting from the 1st of March 2019.
A part of the CME, Rival BrokerTec, is also set to move its trading in euro-denominated repos and government bonds from London to a new hub that is located in Amsterdam.
Earlier this year, the LSE revealed its no-deal contingency plans which included applying for licences in Amsterdam for its TRADEcho, UnaVista, and Turqoise platforms.