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Cboe changes Brexit share trading plans after regulator clash

Cboe changes Brexit share trading plans after regulator clash
FILE PHOTO: Chicago Board Options Exchange (CBOE) Global Markets sign hangs at its headquarters building in Chicago, Illinois, U.S., September 19, 2018. REUTERS/Michael Hirtzer/File Photo   -   Copyright  MICHAEL HIRTZER(Reuters)
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By Huw Jones

LONDON (Reuters) – Cboe has decided to offer trading in all shares in London and Amsterdam following a row between regulators over where shares can be traded if Britain leaves the EU on April 12 without securing a delay or a transition deal with Brussels.

Europe’s biggest cross-border share trading platform said if there is no deal, trading in British and Swiss securities will continue on its British platform, but trading in European Economic Area instruments – mainly euro denominated stocks – will cease and shift to Amsterdam.

“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 said on Friday.

Cboe said that if there is a long delay to Brexit or that a deal is negotiated, it would not start up in Amsterdam until it is able to offer trading in all securities on both its British and Dutch venues, which is likely to be later in 2019.

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

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

This would avoid splitting liquidity in euro, Swiss or UK shares between two centres which could damage prices, he said.

The bloc’s markets watchdog ESMA surprised exchanges last month by saying that if there is a no-deal Brexit, more than 6,200 shares, including 14 British stocks, could only be traded on a platform inside the bloc.

Britain’s Financial Conduct Authority was angered by what one exchange official described as a “land grab” by an EU keen to build up its capital market.

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

Cboe’s revised Brexit strategy means that its customers across Europe have a venue to trade all shares.

The London Stock Exchange’s pan-European trading platform Turquoise has set up a hub in Amsterdam, while rival Aquis Exchange chose Paris.

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

“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,” Haynes said.

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

(Reporting by Huw Jones, Editing by Iain Withers and Louise Heavens)

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