In a statement Thomson Reuters said it has begun the process of applying to the Central Bank of Ireland for authorisation to operate its FX Multilateral Trading Facility (MTF) from Dublin rather than London and it intends to transfer all existing client relationships of the MTF and Dealing, as well as Fixed Income Callouts and Auctions, from UK-based Reuters Transaction Services Limited to a new Irish legal entity ahead of Brexit.
Thomson Reuters' decision to move its FX Multilateral Trading Facility (MTF) to Dublin to maintain access to the EU's single market after Brexit is a significant milestone in Dublin's post Brexit evolution. This is because it is a highly visible move by a highly visible entity in the traded markets, and because Dublin, while possessing a long standing core heritage in trading, fx and treasury, has not been a primary fx trading centre since the establishment of the euro and the eclipse of the constituent euro currencies, including the Irish pound.
A multilateral trading facility (MTF) is an EU regulatory term for one of four types of 'self-regulated financial trading venue' defined by MIFID II: A regulated market (RM) run by a market operator; A multilateral trading facility (MTF); An organised trading facility (OTF), and a Systematic Internaliser (SI).
Thomson Reuters said all spot forex trading, where its volumes top $100 billion a day, would remain in London, as would its post-trade services.
Its forex business is part of the trading operations being bought by private equity giant Blackstone.
MIFID's 'self-regulated financial trading venues' are alternatives to the traditional stock exchanges where a market is made in securities, typically using electronic systems.
Article 4 (15) of MiFID describes an MTF as a multilateral system, operated by an investment firm or a market operator, which brings together multiple third-party buying and selling interests in financial instruments – in the system and in accordance with non-discretionary rules – in a way that results in a contract. The term 'non-discretionary rules' means that the investment firm operating an MTF has no discretion as to how interests may interact. Interests are brought together by forming a contract and the execution takes place under the system's rules or by means of the system's protocols or internal operating procedures.
Reuters has been a pioneer in electronic foreign exchange dealing, dominating spot fx trading through its Reuters screen platforms in bank trading rooms in the 1970s, and in the 1980s developed market making trading platforms, joined as a comp[etitor in the market during that decade by the nascent Bloomberg.
Reuters has had a strong presence in Dublin since the 1980s, originally servicing the then Irish pound fx, money, gilt and equity markets, servicing a community of some 20-30 trading rooms in Dublin.
IDA Ireland issued a statement saying:
"IDA Ireland today welcomed the announcement that Thomson Reuters intends to relocate its FX Multilateral Trading Facility to Dublin.
"Subject to licence approval by the Central Bank of Ireland, Thomson Reuters plans to operate its FX Multilateral Trading Facility (MTF) from Dublin rather than London as a result of the UK’s planned departure from the European Union (Brexit) on 29 March 2019.
"The company announced that it will transfer all existing client relationships of the Thomson Reuters MTF and Dealing, as well as Fixed Income Callouts and Auctions, from RTSL to its new Irish legal entity ahead of the Brexit date. This will include all EU/UK clients as well as non-EU clients accessing these services, subject to regulatory permissions being granted in key jurisdictions outside the EU/UK.
"Minister for Business, Enterprise and Innovation Heather Humphreys TD said, "This decision by Thomson Reuters to establish this operation in Dublin is very welcome news and illustrates the strength of Ireland's position in attracting significant companies in the Financial Services Sector. The Government has been making strenuous efforts to ensure that we have the right conditions in place in Ireland, especially regarding skills availability, to attract the knowledge based sectors and announcements like this one today are a vindication of these efforts. We represent a very attractive base in the Eurozone for these companies and we will continue to pursue new investors in this sector."
"Martin Shanahan, CEO IDA Ireland said: “Thomson Reuters’ choice of Ireland is very significant in terms of our ability to attract top international brands that have influence and reach. This provides IDA Ireland with another powerful calling card for new types of business within International Financial Services and points to Ireland’s attractiveness to international financial services business. Ireland has the right mix of regulation, skills, experience and office space to make us a very logical place for financial services to locate.
“Our track record, pro-business environment, highly skilled talented workforce and an unwavering commitment to the European single market continues to appeal to investors.”