Brexit Liquidity Shift Yet to Impact City of London

Brexit Liquidity Shift Yet to Impact City of London

By Thomas Helm
March 18, 2021, Practice Insight from IFLR

Fragmentation is more of an issue post-Brexit,” Bhas Nalabothula, head of European interest-rate derivatives at Tradeweb told Practice Insight. “On the dealer-to-customer side, which we are a part of, we have seen clients migrate between venues to optimize their access to liquidity. For euro-denominated interest rate swaps, trading activity from some UK-based clients has shifted to US SEFs.”

In the current market state, European banks cannot provide liquidity on UK MTFs [multilateral trading facilities] for DTO [derivatives trading obligation] products, Nalabothula added, as they would not be able to fulfill both the UK and EU trading obligations simultaneously. “EU buy-side clients have moved their trading to EU MTFs to fulfil their own trading obligations, while clients in the UK switch between venues according to where they can maximize liquidity,” he said.

full article