UK increases market share in currency trading despite Brexit, says BIS – Quartz


Since the British voted to leave the EU, one of the biggest worries has been what will happen to the UK’s prized role as a preeminent global trade hub. So far, when it comes to the $ 6.6 trillion per day currency market, London is increasing its lead over New York and other global centers.

The UK’s foreign exchange market share rose to 43.1% in April 2019 from 36.9% in 2016, according to preliminary results of the Bank for International Settlements (BIS) triennial survey . The United States’ share declined by three percentage points to 16.5% during this period, while that of Hong Kong increased by just under one percentage point to 7.6%.

The BIS has studied over-the-counter (OTC) currency markets or financial assets that are not traded on an exchange. Over-the-counter markets make up the bulk of the global currency market.

Brexit is a serious challenge for the UK’s financial sector, which accounts for 6.9% of the country’s economy and supports 1.1 million jobs. Leaders still face high levels of uncertainty – it has been more than three years since the referendum to leave the EU and it is still unclear when, if and under what conditions Britain will leave the bloc.

Financial institutions have relocated workers, capital and other resources to mainland Europe and New York City to prepare for the worst, with some £ 1 trillion ($ 1.24 billion) in assets crossing the Channel, according to the consulting firm EY. Cities like Paris and Frankfurt have organized sustained campaigns to attract bankers to their own financial centers.

But so far, Brexit has not been fatal for the UK. In fact, London has tightened its grip on global currency exchange flows and Britain remains the main European hub for fintech startups. Bank of England Governor Mark Carney recently said the impact of a no-deal Brexit would be less severe than initially thought, as preparations were put in place to reduce the fallout. Major international banks have moved less than 1,500 jobs out of the UK, according to the Financial Times (paywall), which is not as much as once feared.

“There is no reason to believe that Brexit should restrict access to financial markets,” Andrew Bailey, managing director of the UK’s Financial Conduct Authority, said today. The UK market is a global public good ‘and we want it to stay that way’.

Despite this, there are signs that Brexit uncertainty has dampened economic growth: Gross domestic product rose 1.4% last year, the slowest rate since 2011, according to data from the Banking Federation. European. The UK banking sector, which posted a return on equity of 5.5% in 2018, lags behind France at 6.5% and the Netherlands at 8.2%, according to the data.

It remains to be seen what will happen to the UK once (or perhaps if) Brexit actually takes place. Britain might then have a harder time attracting top talent from the continent and beyond, given the political upheaval and uncertainty for non-Britons considering living here. But for now, the UK’s time zone – the best in the world for facilitating trade between geographies – common law legal standards and in-depth financial expertise remain deciding factors for many of the largest financial institutions. of the world.


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