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InvestmentsBanks, asset managers back plan for "explosion" in UK share trading By...

Banks, asset managers back plan for “explosion” in UK share trading By Reuters


© Reuters. FILE PHOTO: The London Stock Exchange Group workplaces are seen in the City of London, Britain, December 29, 2017. REUTERS/Toby Melville/File Photo

By Huw Jones

LONDON (Reuters) – Top banks and asset managers have thrown their weight behind proposals in Britain to scrap curbs on share trading after billions of euros in day by day inventory dealings left London for Amsterdam attributable to Brexit.

The finance ministry proposed the modifications in its overview of wholesale capital markets to assist keep London’s competitiveness as a world monetary centre after largely being minimize off from the European Union since December.

A rule Britain inherited from the bloc often called the share trading obligation mandates that market individuals should use particular venues like inventory exchanges to commerce.

In their responses to the ministry’s public session on a welter of draft reforms, UK Finance, which represents banks in Britain, and the Association for Financial Markets in Europe, whose members embody large worldwide banks and asset managers, each backed scrapping the STO to extend competitors.

“We agree with UK authorities that the removal of the STO is necessary to ensure that UK-based firms have the ability to execute trades on the venues where they will achieve optimal results for their clients,” AFME mentioned.

“We agree this obligation should be removed as it has simply imposed unnecessary costs upon liquidity providers and trading venues without any corresponding benefits,” mentioned UK Finance, including that its elimination wouldn’t result in any detrimental penalties.

The prospect of returning to an efficient free-for-all in share trading has raised some considerations, nonetheless.

Michael Horan, director, head of trading, EMEA, at BNY Mellon (NYSE:)’s Pershing, informed Reuters final month that scrapping the STO might create an “explosion” in extra trading venues.

“It could be a bit too much, too soon in terms of making changes. We don’t want a return to… where liquidity was over fragmented, and therefore harder to police,” Horan mentioned.

Following responses to its public session, the finance ministry is anticipated to publish remaining plans for reforming the wholesale market in coming weeks.

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