Paris 'emerges as winner' in EU financial trading

Paris is emerging as the favoured financial trading hub for continental Europe as London-based banks and asset managers prepare for the likely consequences of Brexit, according to a report in the Financial Times.

Paris 'emerges as winner' in EU financial trading
According to the Financial Times, several major financial firms are gearing up to relocate their EU trading operations from London to the French capital with BlackRock, the world's largest asset managers, and JPMorgan Chase "poised to join Bank of America and Citigroup in the vanguard".

Paris attracting business from London

London Stock Exchange Group Plc’s clearinghouse in the U.K. capital has much to lose from a no-deal Brexit, but its Paris division has much to gain.Monday's FT article followed an earlier report from Bloomberg that LCH SA - the London Stock Exchange's French clearinghouse - was attracting business from London with JPMorgan and Societe Generale SA being approved to clear client trades through LCH this summer.Fund managers such as Frankfurt-based Union Investment and Helaba Invest have also decided to send their trades to Paris, according to Bloomberg.

Major financial firms to move

Christoph Hock, head of multi-asset trading at Union Investment, said: “If at one stage there’s a regulatory decision that we have to make use of a central clearer that’s also continental European based, LCH SA gives us the biggest flexibility.” Mr Hock added that Deutsche Bank AG, Union’s clearing bank, would soon be ready to clear on LCH SA, although the bank has refused to comment.

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The FT said: "Over the summer, (Bank of America) 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."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 once 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."

Paris to become big Europe trading hub

Christian Noyer, the former French central bank governor who is coordinating Paris's financial sector 'charm offensive', told the FT: “I think banks and asset managers will try to concentrate trading operations in one EU location. That doesn’t mean London won’t remain the biggest financial centre (but) Paris could become the big trading hub in continental Europe.”Nick Rustad, JPMorgan’s global head of clearing, said recently: “The biggest source of concern for European market participants is continued access to the cleared derivative marketplace.“It’s because there is no guarantee in the event of a hard Brexit that European legal entities can continue to meet their clearing obligations or remain clearing members of UK-based clearinghouses."The lobby group Paris Europlace has forecast that 3,500 jobs in the financial sector could be  created in the city because of Brexit. Up to 1,000 of these could come from HSBC, which announced soon after the 2016 Brexit referendum that it would be moving the jobs from London to its already large French operation.Morgan Stanley has also said that it plans to add about 80 jobs in Paris, while Goldman Sachs has said France is a priority in its plans to double its workforce in continental Europe. 
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