More than half the volume in London is in shares of European Union companies, and that’s at risk of migrating to the EU without a breakthrough in negotiations, according to data kept by Cboe Global Markets Inc. The City’s loss of face notwithstanding, the biggest losers would be investors because the more splintered trading will result in worse prices.

“It’s harmful to investors both in the U.K. and the EU not to be able to have best execution in the most liquid market,” Nausicaa Delfas, the top international official at the U.K.’s Financial Conduct Authority, said in an interview.

Companies based in the 27 European Union countries contribute more than half the value of all stocks traded in the U.K. In August, that averaged 7.2 billion euros ($8.5 billion), or about 60% of the 12.5 billion euros of equities that changed hands daily, according to Cboe, whose data covers trading currently handled in the U.K. by CBOE Europe, Aquis Exhange Plc, the London Stock Exchange Group Plc and facilities run by several banks.

The key to maintaining the status quo is a finding — known as “equivalence” — by the EU that U.K. regulations are as robust as the bloc’s; that would allow European traders to buy and sell shares on London markets.

Swiss Lesson

That’s far from a sure thing as the Swiss have learned. Last year, the EU withdrew equivalence from Switzerland, effectively prohibiting the trading of EU-listed securities there. Switzerland retaliated by banning trading in Swiss shares on EU venues. While volume in Zurich increased, trading costs for Swiss mid- and small-cap equities rose by around 20% soon after the EU stopped recognizing SIX Swiss Exchange AG, according to Virtu Financial Inc.

“I’m concerned for the industry as it’s bad for the end investor,” said Alasdair Haynes, chief executive officer of Aquis Exchange Plc, a pan-European equities venue in London that has set up a new Paris platform. “This is a political move that will make markets worse.” He estimates 30% of trading done now in London could move to the bloc.

The U.K. hasn’t yet laid out its policy for whether it will demand U.K. traders to trade U.K. or other shares inside Britain.

Cboe says it’s prepared for any scenario, but “it is not an outcome we had hoped for,” David Howson, president of Cboe Europe, said in a statement. A majority of the company’s customers are connected to Cboe’s Dutch trading platform and are ready to shift, he said.

The LSE declined to comment.

The Association for Financial Markets in Europe, the region’s biggest lobby group for brokers and investors in capital markets, is pressing both sides to reach an agreement.

“EU investors will not be able to access major pools of liquidity for a number of EU shares” in the absence of equivalence, said April Day, managing director and head of equities at AFME. So money managers “may not be able to execute trades at the best available price.”