Tradeweb Selects Amsterdam After Brexit08.03.2017
Tradeweb has submitted an application with the Dutch Authority for the Financial Markets (AFM) to establish a fully regulated entity within the EU.
- Tradeweb is focused on providing market participants with uninterrupted access to liquidity, services and choice once Brexit becomes a reality.
- Tradeweb’s new office will serve as the electronic trading hub for the firm’s EU-based clients, benefitting from Amsterdam’s regulatory environment and infrastructure.
“Tradeweb’s imperative has always been to provide our global client base with access to liquidity across a range of products. Post-Brexit, for many investors, uninterrupted access to that liquidity requires an independent and fully functional regulated entity within the EU, and our Amsterdam office will be a new expression of our mission,” said Enrico Bruni, head of Europe and Asia business at Tradeweb.
Consultancy Oliver Wyman said in a report this week that if the negotiations over the UK leaving the EU result in a ‘hard’ Brexit, with UK financial services losing access to the trading bloc, this will fragment the European wholesale banking market and make it significantly less profitable. The study, One Year On From The Brexit Vote, estimated a hard Brexit will result in the wholesale banking industry needing to find between $30bn and $50bn of extra capital to support new European entities, equivalent to between 15% and 30% of the capital currently committed to the region.
Wholesale banks are likely to need to increase their presence inside the EU over time. Some functions previously centralized in London will have to be duplicated in an EU subsidiary, such as risk, compliance, and finance. Oliver Wyman estimated that such changes could add 2% to 4% to the annual cost base, equivalent to $1bn across the industry.
The consultancy said Frankfurt and Dublin are emerging as the main destinations for potential new sales and trading entities, along with Paris, Luxembourg, and Amsterdam. Last year, with TheCityUK, Oliver Wyman estimated that a hard Brexit would drive 31,000 to 35,000 jobs out of the UK across all financial services, including between 12,000 and 17,000 in wholesale banking. Now the consultancy has increased its estimate to 35,000 and 40,000 UK job losses just in wholesale banking.
Review of trading desks found that incoming banks did not yet retain full control of their balance sheets.
UK has a greater market share than pre-Brexit for on-venue execution of GBP interest rate swaps.
Recognition has been temporarily extended until 30 June 2025.
The trade repository has been providing UK services since the first business day after Brexit on 4 Jan 2021.
European firms could operate temporarily in the UK after Brexit while seeking full authorisation.