Brexit is putting pressures on the City but there may be opportunities ahead for the capital, says Cboe’s president for Europe, David Howson.
“As an international hub, I don’t think it’s lost its place,” Howson told Financial News in an interview.
“It’s well-placed more generally if you look at the legal frameworks, the taxation, talent pool and so on. The UK remains as amenable as they were on being open for business and looking to ink those trade deals that are in the best interests of the UK,” Howson said.
The City is now trying to carve out a new path amid the loss of a clear post-Brexit determination could have shored up its equity trading top spot for EU-listed securities.
“It’s lost equity trading in EU-listed securities. That’s a fact, and that’s gone and will never return, absent some other tectonic shock, but I don’t foresee that,” Howson said.
UK policymakers signalled they would make the effort to ensure a Brexit deal for finance that hinged on equivalence following the December announcement of an EU-UK trade deal that largely ignored the UK’s finance sector. But this hope fast waned as EU policymakers have pushed back, with only limited access to European markets on the table in the near term.
But he remains positive about the outlook for the City, noting the return of Swiss trading in February.
“Our market share is now actually up to where it was prior to when the capability to trade Swiss shares was taken away in June 2019. We’re back to where we were and it’s looking very good in terms of the trajectory there.”
London is still considered attractive by investors for foreign direct investment, and stands above the likes of Amsterdam and Stockholm, scoring the highest in a survey of investors where 44% ranked it tops.
A recent report from think tank New Financial also showed that the capital held its dominance in markets including foreign exchange and derivatives trading despite Brexit.
“If the UK can be open to competition, open to business, then it can actually create itself a good niche. Whereas if you look at the European philosophy, some groups appear to be trying to protect and pull in business. That fortress-Europe approach could well dampen the opportunities that are available to Europe. If you’re less open, if you try to be too protective, then you can fail to be competitive on a global scale,” Howson said.
The objective of Europe’s Capital Markets Union is “about being open, being a globally relevant, competitive single marketplace”, according to Howson. “And you don’t do that by just putting up walls all around the premises.”
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