Post-Brexit World. Which EU Country Will Become the New CFD Capital?

2021 brought about the end of the Brexit Brexit Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum. In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019. Active Prime Minis Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum. In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019. Active Prime Minis Read this Term transition period, finally confirming the UK's exit from the EU. The changes also affected companies operating in the financial markets, including the retail FX/CFD sector, brokers, and their clients. Market experts wonder which jurisdiction can take over from the city of London as the trading capital in Europe and the most common bets include Cyprus, Malta, Germany, and France, but CEE countries may further benefit due to their low costs of managing a business.

Which European Country Can Gain the Most in the FX/CFD Sector after Brexit

In the latest edition of the Quarterly Intelligence Report, Finance Magnates Intelligence examines which representatives of brokerage firms directly involved in European operations think about the changes that may await the market as the Brexit transition period ends.

According to the survey, industry experts believe Cyprus, which is already the leading and most popular licensing jurisdiction for brokers looking to locate in Continental Europe, stands to gain the most from the changes (35%). Exactly 24% of respondents believe that Malta will take over a large part of the brokerage business, followed by Germany (16%) and France (13%). The last piece of the brokerage pie is expected to be filled by the CEE market, with Poland, among others being mentioned. In contrast to other EU countries, Poland offers an additional category of retail clients with a higher price-to-book ratio.

“I do believe Cyprus and Malta have a lot of potentials; however, it all comes down to the fine balance between protecting client interests and leaving some freedom to the brokers. Whoever does this best, ultimately wins,” Natalia Zakharova, Head of Sales at FXOpen, said.

London’s Dominance Is Diminishing, but Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term Hub City Is Still Hard to Replace

Commenting on the possible end of London’s dominance, Graeme Watkins, CEO at Valutrades Limited, said: “I don't think this is the case at all. London has 200 years of history as a financial center. Having a UK FCA license and offices in London is still a sign of credibility that is valued in many parts of the world, not just Europe. Brokers will indeed move some of their business to Europe, but so far I have not seen anyone closing down their UK entities, and I believe the interest is still to have both the UK and European license.”

London's weakening position in the FX market trading was confirmed, among others, by the triennial report published in August 2020 by the Bank of England. Daily foreign exchange trading volumes in London have shrunk by 16 percent from the prior year to $2.41 trillion in April 2020. The decline in the average daily volume in the city was broad-based and was reported across almost all currency pairs, instrument types, counterparty types, and execution methods.

Regardless of location decisions and regulatory changes, due to the lack of passporting, the coronavirus volatility that fuelled record volumes and broker profits last year should continue into 2021.

To get the full article and the bigger-picture on the post Brexit EU industry, get our latest Quarterly Intelligence Report.

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