‘Brexit’ returned European equities and derivatives to Amsterdam, study finds

Rick Steves

The report found that the speed and magnitude of the relocation of European equities trading to Amsterdam have exceeded expectations, by already tripling in volume in the first months of 2021.

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Brexit has returned the trading in European equities and derivatives to Amsterdam, according to research conducted by De Argumentenfabriek and commissioned by the Capital Amsterdam Foundation.

The United Kingdom’s withdrawal from the European Union on 31 December 2020, however, has not yet resulted in a major relocation of people and jobs from London to the Netherlands.

The outflow from London to the EU is expected to continue as there is little chance that the EU will grant equivalent access rights to financial companies based in the UK anytime soon.

Asset managers and banks have mostly relocated their activities from London to Dublin, Frankfurt Paris, and Luxembourg, but hardly to Amsterdam.

Strict Dutch remuneration rules have probably played a role in this, but the Dutch capital markets will benefit from further European integration and harmonization.

The report found that the speed and magnitude of the relocation of European equities trading to Amsterdam have exceeded expectations, by already tripling in volume in the first months of 2021.

In the run-up to Brexit, many financial companies have set up a ‘minimum viable presence’ in the EU as a fall-back option in the event of a hard Brexit in the realm of financial services.

“The hardest possible Brexit as expected in the 2019 report has indeed materialized. After Brexit, companies have started to expand this presence”, De Argumentenfabriek stated.

“The Netherlands Foreign Investment Agency (NFIA) estimates that around 1,000 new jobs have been created so far by financial firms that relocated their operations to Amsterdam since Britain left the EU. The number of jobs is expected to continue to grow”.

The UK is expected to gradually move away from the EU in terms of regulation to protect and grow their non-EU related activities. This creates the risk that there will also be competition within the EU in the field of regulation, because individual Member States expand European regulations (gold plating) or weaken them (lead plating).

The Dutch capital markets benefit from a level playing field within the EU, so the Dutch government will have to focus on further integration and harmonization of European financial regulations. Before Brexit, the Netherlands collaborated a lot with the UK in this area; now that it has fallen away as a partner, new allies will have to be sought to defend these interests.

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