The sharp move in activity came in the wake of the UK and EU failing to reach a “mutual equivalence” agreement on cross-border regulation of derivatives trading following the UK’s departure from the trading bloc. A permanent shift to New York would be particularly damaging for London.
“The market was primarily based in the UK. But the market is global and quite agile – it will shift. This is what we expected to happen with the lack of equivalence,” Kirston Winters, managing director at IHS Markit’s MarkitSERV, tells IFR. “The key thing is liquidity pools are fragmented. The worry participants have is, what are you doing to prices and liquidity if you’re fragmenting the market?”