Goldman Sachs Group Inc. plans to create a European equity trading platform to enable its clients to buy and sell shares even without entering into a post-brexit agreement allowing them to trade in London.
The company reports that the Wall Street bank has asked French regulators to open a trading platform in Paris called SIGMA X Europe. It intends to open by January 4, subject to regulatory approval.
"It is very important for us that all of our clients are able to respond to what we believe will change the liquidity situation in Europe and the UK after Braxit," said Elizabeth Martin, Head of e-futures and equities trading at Goldman Sachs in an interview.
Goldman is joining competitors, including Cboe Europe and London Stock Exchange Group Plc, in forming platforms in European cities to prevent disruption at the end of the year when the UK loses automatic rights to trade the majority of EU shares for clients within the block.
Martin said she believes London will lose most of its trading volume on EU equities. About a third of all trading in European equities takes place in London, with an average of €8.6 billion ($10 billion) per day during October in the general market, which averages €26.6 billion, according to Cboe.
SIGMA X Europe will manage a variety of stock markets known as the dark pool, as well as the periodic auction book. It will accept all European firms whose activities are regulated by the market rules of the block, known as MiFID II. It plans to start trading EU equities in 15 markets. Both UK and EU shares will continue to be quoted on London's original Goldman SIGMA X platform.
Goldman has not announced exactly how many people will move to Paris to work on SIGMA X Europe. The bank has signed a 12-year lease agreement for a new office in the 16th district, which enabled it to double the number of staff in the French capital.
LSE announced last month that it will launch its Amsterdam-based Turquoise Europe platform on November 30, although it will cancel the plan if the European Union announces that the UK can provide equity trading services to the EU through a process known as equivalence.
Investors in the EU can buy and sell stocks only in countries that are considered to have the same strict rules as the block. The EU authorities have not yet recognized this recognition by the UK, and industry authorities are pessimistic about progress before a separate trade deal is concluded.