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Goldman Sachs prepares to unveil a Paris trading venue as Brexit deadline approaches

Kumutha Ramanathan
·Contributor
·2-min read
ANKARA, TURKEY - OCTOBER 20: In this photo illustration, a mobile phone screen displays logo of the Goldman Sachs Groups Inc. in front of a computer screen displaying the logo of General Motors Co. in Ankara, Turkey on October 20, 2020. (Photo by Muhammed Selim Korkutata/Anadolu Agency via Getty Images)
The US bank has applied to French regulators to start a Paris-based trading venue called SIGMA X Europe, according to the company. It is slated to open before 4 January subject to regulatory approvals. Photo: Muhammed Selim Korkutata/Anadolu Agency via Getty Images

A Goldman Sachs (GS) executive says the bank is planning to build a European stock trading platform that allows its clients to still buy and sell shares in the event of a no-deal Brexit.

The US bank has applied to French regulators to start a Paris-based trading venue called SIGMA X Europe, according to the company. It is slated to open before 4 January subject to regulatory approvals.

“It’s critically important for us to have the capabilities in place for all our clients to respond to what we believe will be a changing of the liquidity landscape in Europe and the U.K. post-Brexit,” said Elizabeth Martin, global head of futures and equities electronic trading at Goldman Sachs, in an interview cited by Bloomberg.

The news comes as other industry players, including Cboe Europe and the London Stock Exchange, are creating contingency plans once Britain officially leaves the bloc, when the country loses its automatic rights to host trading in most EU shares for clients inside the bloc.

London will lose most of its trading volumes in EU stocks, according to Martin. Roughly a third of European share trading takes place in London, with an average of €26.6bn ($31.5bn, £23.6bn) a day during October, according to data from Cboe.

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According to Goldman, SIGMA X Europe will operate a private stock market, known as a dark pool, as well as a periodic auction book. It will accept all European-based firms regulated under the bloc’s market rules known as MiFID II. The initial plan is to to start trading EU stocks across 15 markets.

The New York-based bank’s original London-based SIGMA X venue will continue listing both UK and EU stocks.

To buy and sell stocks within the EU, investors must do so within the bloc’s trading regime know as equivalence. EU authorities have not yet granted this recognition to the UK and industry bodies are not confident of ratification until after a separate trade deal is reached.

Watch: What happens if no Brexit deal is struck?