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#1 29-11-2020 11:52:44

johnedward
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From: Paris - France
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Goldman Sachs selects France for its post-Brexit market transactions

Goldman Sachs selects France for its post-Brexit stock market transactions


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Goldman Sachs is putting contingency plans in place in the event that England withdraws from the EU with no deal in place. While Britain's exit from the EU is still pending, the US bank has requested the creation of a stock exchange trading centre in France to host its MiFID II-regulated transactions.

Pending regulatory approvals, GS could shift trading in shares of companies based in the block to its new Paris platform, called "SIGMA X Europe", if London loses full access to the single market. UK stocks would remain on its existing platform in London.

The new platform will function as a private trading place, or "dark pool", which allows clients to buy or sell stocks using anonymous trading strategies. Goldman Sachs expects French regulators to approve its new business in early January of next year.

"It is essential that we have the necessary capacities so that all of our clients can respond to what we believe will be a change in the liquidity landscape in Europe and the UK post-Brexit," Elizabeth Martin, co-Head of Electronic Futures and Equity Trading at GS.

Goldman Sachs has already started relocating many employees from London ahead of the Brexit deadline, as the bank's EU operations risk splitting up if Britain leaves the EU without a deal. The bank said no final decision has been made on how many staff will ultimately be transferred, but it has taken additional offices in Frankfurt and Paris.

Brexit could cause disruption in the derivatives market

The current transitional agreement allows cross-border financial services to continue uninterrupted until the end of this year. However, if UK leaders fail to push through their divorce settlement, EU traders will be cut off from UK-based market operators if no emergency measures are put in place.

European investors feared they would be cut off from UK financial markets, as all other European financial centers are smaller. Also, the UK financial services industry is struggling to find a way to preserve the flow of existing transactions after the country leaves the EU.

An earlier deal between the BOE and the ESMA (European Securities and Markets Authority) has also relieved UK clearing houses, which must decide whether to move billions of euros in derivative trades from Britain.

Without such an agreement, clearing houses risk not obtaining regulatory approvals, leading to operational problems such as European banks facing much higher capital charges when they use it to process their transactions.

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