Financial venues continue to chart their course moving forward in light of the upcoming Brexit next March. While banks have largely drawn the most focus, other exchanges and groups have also faced similar decisions, opting to relocate operations or headquarters into mainland Europe. This includes Thomson Reuters, which will be shifting its foreign exchange (FX) derivatives operations to Ireland.
March 2019 will formally see a UK schism with the European Union, which promises to bring a host of legal and regulatory transformations. To get ahead of this seismic shift, most venues have been working to apply for banking licenses or other measures. For Thomson Reuters’ part, its FX derivatives trading will be moving from London to Dublin, having long been seen as an attractive destination for venues.
Over the past couple years, Dublin has emerged alongside Frankfurt as the two most likely destinations for groups looking to relocate out of London. Boasting an attractive labor pool along with tax benefits, Dublin succeeded in attracting several top-tier banks and other trading outlets. Unlike Frankfurt, the city also has not faced such a dearth of office space as well.
Solidifying role in EU market
Per the latest move, Thomson Reuters has already formally applied to the Irish central bank to shift its FX derivative trading facility to Dublin, per a Reuters report. The move will ensure that Thomson Reuters can continue to tap into and sell into the EU’s single market, a prospect seen as implausible by remaining in London post-Brexit.
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According to a group statement, “Thomson Reuters has commenced the process of applying to the Central Bank of Ireland for authorization to operate its FX Multilateral Trading Facility from Dublin rather than London as a result of the UK’s planned departure from the European Union. It is our intention to transfer all existing client relationships of the Thomson Reuters MTF and Dealing, as well as Fixed Income Callouts and Auctions, from RTSL to our new Irish legal entity ahead of the Brexit date.”
The move is particularly noteworthy given that Thomson Reuters ranks as one of the biggest and most established trading platforms in the industry. Thomson Reuters presently boasts daily derivatives trading volumes in excess of $300 billion, instantly placing a new emphasis on Dublin as a financial center.
The shift also coincides with that of other electronic trading platforms and venues, which have looked to move out of London ahead of Brexit. The aggregate effect of these groups leaving is still yet to be realized, though many experts continue to see the erosion of London’s status as a paramount financial hub moving forward.
This was corroborated by Thomson Reuters itself, which will retain all of its spot forex trading in London. With volumes besting nearly $100 billion a day, along with its post-trade services, the departure is a notable blow for London, though one that the city is poised to rebound from.