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30 September 2018

Financial Times: Paris set to triumph as Europe’s post-Brexit trading hub


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Paris is emerging as the favoured financial trading hub for continental Europe, as some of the world’s biggest banks and asset managers prepare for life after Brexit by steering their EU operations away from London to the French capital.


BlackRock and JPMorgan Chase are poised to join Bank of America and Citigroup in the vanguard, according to people familiar with their thinking.

Over the summer BofA accelerated its preparations for Brexit by announcing details of a new Paris trading floor with room for 1,000 staff. Wall Street rival JPMorgan Chase is also increasingly attracted by Paris, bankers said, though it has yet to declare officially how big a trading operation it will put in the city.

“Over time, and depending on if a place becomes the new financial centre in Europe, we may do what we did in London 20 years ago, and consolidate,” Daniel Pinto, JPMorgan investment bank chief, told the Financial Times.

Until recently, attention had focused on which eurozone financial centre would attract the new formal subsidiary registrations, as banks, insurers and asset managers have raced to ensure they have the legal and regulatory structures in place to continue doing business across the EU27 if and when they are barred from “passporting” out of London.

Frankfurt and Dublin dominated that battle. But Paris seems set to triumph in trading — a more valuable prize due to the jobs and taxes that go with it — as banks and asset managers realise the merits of establishing a dominant hub to concentrate market liquidity and expertise for the trading of securities. 

“If you ask most people in the industry, the number one choice is Paris,” said the boss of a large investment bank, adding that labour costs are now as low as the UK.

The Parisian expansion comes as the UK’s City minister said Britain would do “whatever it takes” to defend the position of London as a global financial centre. John Glen said the numbers that have been shifting out of London are so far limited, adding: “It is totally at odds with the flowery rhetoric you see from European leaders — you know, saying ‘Come to Paris’.”

Another big factor in banks choosing Paris has been the sophistication of French regulators, which have long overseen the complex trading and derivative operations of BNP Paribas and Société Générale, financiers said.

Banks’ plans are tracking those of their clients, with 70 asset managers — from large groups to small hedge funds — in the process of securing licences to operate in Paris, according to officials. BlackRock is chief among them, and is even considering designating Paris as its pan-European headquarters, according to two people close to the $6.3tn money manager. That could see its office there expand more than six-fold to between 200 and 300 staff within a year or so. [...]

Full article on Financial Times (subscription required)



© Financial Times


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