TULIP MANIA

Amsterdam has won the trust of another London financial firm preparing for life after Brexit

Obsession
Future of Finance
Obsession
Future of Finance

Amsterdam won another prize from London, as financial companies in the British capital plan for life after the EU: Michael Spencer, CEO of NEX Group and a London financial grandee, said the company has chosen Amsterdam as its base on the continent. The hub provides a hedge for the company, should Brexit negotiators fail to secure a deal that shelters the UK’s financial sector.

The decision is focused on BrokerTec Europe, an electronic market for European government bonds. Spencer said on a conference call today that his firm could move about a dozen employees to Amsterdam to support the technology platform, depending the outcome of Brexit negotiations. The number of people involved understates the importance of those operations—€241 billion ($284 billion) of European repo, a vital form of short-term borrowing for banks, changed hands every day on the venue in October.

Some 16 months since Brits voted to leave the EU, the outlines of Europe’s financial industry after Brexit are coming into view. Amsterdam is emerging as a new center for the fixed-income market’s electronic plumbing: Two other crucial trading platforms—MarketAxess and Tradeweb—are also relocating there (paywall). The moves make sense, as the Netherlands has a robust trading culture (paywall) and its regulator is seen as competent and approachable.

Spencer noted that Amsterdam is also only a few hours away from London via train, which is another “nice idea.” But while the infrastructure is important for capital markets, the upside for Amsterdam could be limited, as the technology doesn’t necessarily require a lot of workers.

In terms of picking off other UK-based firms antsy about Brexit, Paris and Dublin can also claim some victories, but Frankfurt looks like the frontrunner so far. The German financial capital is home to the European Central Bank, and at least nine banks have said they’re moving roles there, according to Bloomberg. Goldman Sachs, which employs about 6,000 in the UK, recently agreed to lease office space in Frankfurt that would provide scope for up to 1,000 workers. The EU will vote today on a new location for the European Banking Authority, the umbrella regulator for the bloc’s banking system, which is currently based in London.

London is widely expected to retain its financial clout after Brexit—the UK capital employs around 750,000 financial industry workers, and the announcements of moves so far are marginal in the grand scheme of things. The question is whether this erosion slowly shifts financial power to other European cities, or whether a more splintered financial scene makes the entire region less competitive. Negotiations taking place now between London and Brussels will help determine whether Britain leaves the EU with a bruise or something more severe.

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