Cboe Europe, TP ICAP to open EU bases ahead of Brexit

Two of the biggest trading groups headquartered in the UK plan to set up bases in Amsterdam and Paris in coming months in the latest sign that firms in the City of London are becoming more concerned about Britain crashing out of the EU next year.

Cboe Europe, Europe’s largest stock exchange by the value of shares traded, has submitted an application with Dutch regulators to establish an entity in Amsterdam.

TP ICAP, the inter-dealer broker, is in talks with French regulators to set up an EU base to oversee its European operations, including those in Frankfurt, Amsterdam and Madrid, according to two people briefed on its plans.

In addition, smaller share trading platform Turquoise, which is majority-owned by the London Stock Exchange Group, also intends to open a base in the Dutch city, a spokesperson confirmed. All three companies will maintain their City bases.

Amsterdam has emerged as the biggest beneficiary as London-based trading venues make alternative arrangements for Brexit, which threatens to disrupt the passporting system firms have used to access markets in Europe from the UK.

Dutch authorities have made a concerted effort to woo business from London after Brexit, touting its extensive transport links, central location, telecom connections and regulators’ experience in supervising trading.

Fixed income trading venues Bloomberg, Nex, MarketAxess and Tradeweb have all announced plans to set up hubs in Amsterdam.

Mark Hemsley, chief executive of Cboe Europe, said the decision to open a base in Amsterdam was partly because of “the distinct lack of clarity on the status we’ll have from March next year”.

Cboe’s application will cover its regulated markets, benchmark indices and trade reporting units. Turquoise has applied for licences to be able to operate its markets and reporting businesses in the EU.

Cboe is expected to staff the operation with a mix of people from London and new appointments. Cboe employs 80 people in London and the number of people who will work in Amsterdam has yet to be determined.

TP ICAP is in discussions with its top 20 customers about its plans and intends to open the Paris base in the first quarter of 2019, people familiar with the matter said.

Its iSwap fixed income trading venue is also set to be regulated in the Netherlands. It is in talks with the French regulator, the Autorité des Marchés Financiers, over how extensive its operation in Paris needs to be. TP ICAP declined to comment.

The uncertainty over Brexit is also affecting companies that provide ancillary services to capital markets. Duco, a London start-up that works with banks to integrate disparate data feeds, on Tuesday also announced plans to open new offices in Edinburgh, Wroclaw in Poland and Singapore.

Chief executive Christian Nentwich said the expansion was partly to secure talent from around the world.

But the company also processes billions of lines of data, which comes from banks based in the eurozone, and Wroclaw will be its base for technical operations. “There’s definitely pressure on us to put data centres into Europe,” he added.