[noemon]

London unlikely to regain lost EU share trading, warn City figures

UK has given up about €6bn of daily volume since Brexit transition ended

The first day of dealings for the City outside the EU’s single market triggered a large shift in euro-denominated shares from London, where they are typically traded, to new venues in Amsterdam and Paris. It marked an overnight change for investors and banks who had used the UK’s membership of the EU to trade freely across borders.

Gianluca Minieri, deputy global head of trading at fund manager Amundi, said it was “a stunning own goal for the UK. And this is only the beginning”. More volume would move to where investors could get better prices and liquidity, he added.

About €6bn of shares that typically change hands in the City were traded in the EU on Monday, and a similar value on Tuesday, as investors became accustomed to the new regime. The figures equate to almost half of the amount of business that London banks and brokers would normally handle.

Speaking to the Treasury Committee on Wednesday afternoon, Andrew Bailey, governor of the Bank of England, said: “We are already seeing a certain amount of business having to migrate to the EU.” 

However, he noted that the number of jobs lost in the City was lower than once feared, at between 5,000 and 7,000.

The abrupt shift had been necessary because the EU refused to recognise most of the UK’s regulatory systems as “equivalent” to its own, which forced trading in virtually all euro-denominated shares business back to the bloc. Following Brexit, Brussels is keen to assert its own sovereignty in financial services and not leave regulation of euro assets to overseas regulators.

“I don’t see this changing quickly. It’s happened, it’s done,” said Nick Bayley, managing director at consultancy Duff & Phelps and a former official at the Financial Conduct Authority. “I can’t see the EU giving equivalence in this space any time soon.

“As the market adapts, the need for equivalence wanes. Its value is diminishing with every month that goes by,” Mr Bayley added.

Brexit deal explained: what the UK and EU agreed
Brussels would not be keen to send business back, and getting trading rights from the equivalence process “will be a painful process” for the UK, said Mr Minieri.

The UK and EU are looking to agree a memorandum of understanding on future co-operation in financial services by the end of March, although hopes are dwindling that it will be an extensive agreement. 

Mr Bailey said on Wednesday that he was not optimistic about a swift decision from Brussels on the equivalence of the UK’s financial services. 

“The situation we find ourselves in is that the EU has said that it wants more information from the UK on what its future intentions are on regulation,” Mr Bailey said. He added that these requests were “problematic” because the UK would change its rules when it needed to and would be transparent at the time, but could not say what it would do now.

“I strongly recommend we do not become a rule taker,” he said. 

The trading shift is a clear sign of how tough equivalence rulings can be to secure, and yet the exodus is unlikely to seriously dent the UK’s finances. The majority of taxes in the share trading industry are paid on the revenues the trading venues report, rather than the trades themselves. Financial services contributed almost £76bn in tax receipts to the UK Treasury last year.

Banks and fund managers also said it was unlikely thousands of trading jobs would immediately follow assets out of London, as the split had been widely expected and they were prepared.

“What we and all our peers have done in trading is making sure the core client contact is EU-based, but then the product person is still in London,” said a trading manager at a Swiss bank. “So we don’t break any rules, we just have them both on the phone with the client, but nothing in reality changes.”

The head of trading at a big UK-based asset manager said it was unlikely to make a difference to the physical location of trading teams.

“As long as the regulatory environment allows us to continue to access these markets I don’t envisage it being an issue.”

[Potemkin]

The trading shift is a clear sign of how tough equivalence rulings can be to secure, and yet the exodus is unlikely to seriously dent the UK’s finances. The majority of taxes in the share trading industry are paid on the revenues the trading venues report, rather than the trades themselves. Financial services contributed almost £76bn in tax receipts to the UK Treasury last year.

Banks and fund managers also said it was unlikely thousands of trading jobs would immediately follow assets out of London, as the split had been widely expected and they were prepared.

“What we and all our peers have done in trading is making sure the core client contact is EU-based, but then the product person is still in London,” said a trading manager at a Swiss bank. “So we don’t break any rules, we just have them both on the phone with the client, but nothing in reality changes.”

The head of trading at a big UK-based asset manager said it was unlikely to make a difference to the physical location of trading teams.

“As long as the regulatory environment allows us to continue to access these markets I don’t envisage it being an issue.”

Looks like a nothing-burger to me.

[Heisenberg]

Looks like a nothing-burger to me.

This. Also, numbers in the finance industry are so insane in general that this requires a bit of context. While €6bn sounds like a lot, last year, daily trading volumes in London for FX trading alone were about $2.4trn, which was itself a multi-year low. Add stocks, credit, and various kinds of derivatives to this and it's probably about the equivalent of the average person having their annual salary cut by a penny, if that.

Basically, the article is classic FT clickbait. Lol.

[noemon]

Between 5000-7000 jobs permanently lost in the finance industry. A yet unknown amount of jobs lost in the 'product hub' sector. The UK used to be used by Hong Kong, NZ, Australia, Canada, USA as a transit hub for products destined for the EU, all that is finished now as these companies can no longer use the UK as a transit hub since the UK no longer has access in the customs union. This has not even been estimated yet as far as I know at least.

The fish are rotting and all fish exports in the EU have been suspended.

Artists and their entourage now require visas to go play a gig in Europe.

These are all industries the UK has been leading in and all now either totally dismantled or severely undermined. Little here, little there, there are losses that cannot be recovered even if the UK rejoins the EU because supply chains change and companies adapt.

I guess considering a "nothing-burger" makes it more palatable to digest.

[Heisenberg]

Between 5000-7000 jobs permanently lost in the finance industry. A yet unknown amount of jobs lost in the 'product hub' sector. The UK used to be used by Hong Kong, NZ, Australia, Canada, USA as a transit hub for products destined for the EU, all that is finished now as these companies can no longer use the UK as a transit hub since the UK no longer has access in the customs union. This has not even been estimated yet as far as I know at least.

These are all very legitimate concerns (except the 7,000 job "losses", which, from work, I can mostly confirm are sham relocations to Luxembourg ). A €6bn drop in average daily trading volume is not even a drop in the water by comparison. Which is why I said it was clickbait.

Artists and their entourage now require visas to go play a gig in Europe.

Of all the legitimate issues with Brexit, this one has always struck me as the pinnacle of middle class whining, especially given that the proposed ETIAS process will be online and take about 10 minutes.

A visa isn't some horrendous indignity that should only be imposed on the black and brown hordes from the global south. My girlfriend is from India, which entitles her to visa-free travel to a grand total of 18 countries. The UK still has visa-free travel to 93. I think we'll live. Hell, actually having to apply for a visa once in a while might make people a bit more conscious of how needlessly onerous our own visa requirements can be for foreign nationals.

I've said it before, and I'm sure I'll say it again: I would have much preferred we go the Norway route and stayed in the single market, but it's telling that the repeated apocalyptic predictions of an "inevitable" no deal Brexit didn't come to pass. I'm sure it'll lead to absolutely no reassessment of things by the usual suspects on this forum, though...

[noemon]

Of all the legitimate issues with Brexit, this one has always struck me as the pinnacle of middle class whining, especially given that the proposed ETIAS process will be online and take about 10 minutes.

The UK is not a country that will benefit from the EU's ETIAS, unlike Albania, Venezuela and 60 more countries(click link for full list and notice that the UK is not in it) that do not include the United Kingdom because the United Kingdom has refused to reciprocate visa-free travel more generally but also specifically to artists too. The EU offered a visa-free regime to cover artists only since the general population was totally out of question for the UK and that too was rejected.

The ETIAS applies only to countries that have a visa-free agreement with the EU and the UK doesn't.

ETIAS stands for European Travel Information and Authorization System. It is a completely electronic system which allows and keeps track of visitors from countries who do not need a visa to enter the Schengen Zone. In a way, it resembles the U.S Electronic System for Travel Authorization (ESTA), which serves a similar purpose.

This means that British artists touring Europe would have to apply for visas in every single country individually and the visa system in several countries is slow and heavy stuff with a 6-24 month waiting list.

List of countries with a visa-free agreement(covering their entire population and not just artists) with the EU:

Albania
Antigua and Barbuda
Argentina
Australia
Bahamas
Barbados
Bosnia and Herzegovina
Brazil
Brunei
Canada
Chile
Colombia
Costa Rica
Dominica
El Salvador
Georgia
Grenada
Guatemala
Honduras
Hong Kong S.A.R*
Israel
Japan
Kiribati
Macao S.A.R*
Malaysia
Marshall Islands
Mauritius
Mexico
Micronesia
Moldova
Montenegro
Nauru
New Zealand
Nicaragua
North Macedonia
Palau
Panama
Paraguay
Peru
Saint Kitts and Nevis
Saint Lucia
Saint Vincent
Samoa
Serbia
Seychelles
Singapore
Solomon Islands
South Korea
Taiwan **
Timor Leste
Tonga
Trinidad and Tobago
Tuvalu
Ukraine
United Arab Emirates
United States of America
Uruguay
Vanuatu
Venezuela

[Heisenberg]

The UK is not a country that will benefit from the EU's ETIAS

The ETIAS website appears to think differently.
https://www.etias.info/visa-requirements/uk-citizens/

Some travellers had expressed concerns that British citizens would need a visa to enter Europe after Brexit. This is not, however, the case. Although the UK is now outside the EU, British citizens do not need a visa to enter the Schengen Area and stay short-term.

Although there are no visa requirements for UK citizens, travellers will need to apply for ETIAS from the end of 2022. The European Travel Information and Authorisation System is being introduced to improve safety and security across the Schengen Area.

Non-EU citizens from visa-exempt countries, such as the UK, will need ETIAS to cross an external border. ETIAS is not a visa and will be much easier to obtain. The application process is fully online and will take just a few minutes to complete.

Look, I accept it's a change. But until I see a concerted push for us to stop requiring Commonwealth nationals from having to pay huge sums of money and provide a dissertation-length application for a week-long tourist visa to the UK*, I'm not going to pretend British citizens have a hard time of international travel, Brexit or no Brexit.

*Actual requirement when my girlfriend and I went to a wedding in the UK in 2019:
-£250 visa application fee.
-In person interview.
-10 years of complete travel documentation: every visa, entry and exit stamp at every airport visited since 2009.
-Signed letter from my dad stating that she would be staying with us for a week.

Former requirement for Indian citizens initially introduced by Cameron's government, but scrapped due to widespread outrage: Deposit £5,000 in an escrow account, essentially as bail money to ensure you won't overstay. For a fucking tourist visa.

What we will need to stay for up to 90 days at a time in the EU from 2022:
-€7 ETIAS application fee
-A valid email address.

To call this a hardship is, frankly, an insult.

The UK is not a country that will benefit from the EU's ETIAS, unlike Albania, Venezuela and 60 more countries(click link for full list and notice that the UK is not in it) that do not include the United Kingdom because the United Kingdom has refused to reciprocate visa-free travel more generally but also specifically to artists too.

Doing a bit of reading on this, it seems to be the UK's word against the EU's. The UK claims the EU blocked an easier path for reciprocal travel for artists, and the EU is blaming the UK. It's probably best not to state as absolute fact that it was the UK's fault, given the EU's accusations come from anonymous sources. I'd also say that, while the UK has conducted itself rather poorly during this process, the EU has hardly been the picture of generosity and goodwill either. Lol.

But, as we've seen at more or less every turn in this process, to state that it's settled and a compromise can't be figured out, seems very silly. I suspect this will ultimately be resolved one way or another.

[noemon]

The ETIAS website appears to think differently.
https://www.etias.info/visa-requirements/uk-citizens/

That is good news. I browsed that website yesterday and did not see this.

That's fine then.