Brexit drives stock trading to the Netherlands rather than to Germany
Brexit has shifted the balance in European stock trading in favor of Amsterdam and Paris. Following the UK's decoupling from European financial markets in early 2021, the trading volume of foreign stocks surged at exchanges in the Netherlands and France, as noted by the EU securities regulator ESMA in a report on the European stock market at the beginning of the week. While Germany remains an important stock exchange location, it attracted only a smaller portion of the trading. "The stock market, following the United Kingdom's exit, remains highly concentrated on a few trading venues," states ESMA.
In Germany, stock trading is primarily centered around the Deutsche Börse, as well as a few regional stock exchanges. However, in the Netherlands, France, Italy, and some other locations, the pan-European exchange Euronext dominates regular trading. Additionally, ESMA monitors over-the-counter trading, which has lost significance with the UK's withdrawal.
Trading volume of foreign stocks decreased
Excluding the UK, the total trading volume of foreign stocks decreased. The trading volume of securities from other countries within the European Economic Area averaged 7.2 trillion euros in 2019 and 2020, but it dropped to an average of 3.7 trillion euros in 2021 and 2022. The turnover of other foreign stocks declined from 4.1 trillion euros to 1.9 trillion euros.
Overall, stock trading is now more concentrated on the respective domestic markets. Previously, German stocks were predominantly traded abroad, but now, nearly two-thirds of the trading volume is on the domestic market. This trend is also observed in other EU countries.
Furthermore, European stock trading, with a volume of 13.4 trillion euros in 2022, is considerably smaller than before when it included the UK, which led to a total of 25.0 trillion euros. For comparison, the US had a trading volume of approximately 86.3 trillion euros in 2022, and the concentration is even higher there. The exchange operators CBOE, Nasdaq, Intercontinental Exchange, and Miami International Holdings control the majority of trading venues.
