ENX Euronext NV

LONDON—The chief executive of Europe's largest stock exchange said it is "highly likely" to establish a presence in the eurozone as a result of the U.K.'s vote to split from the European Union.

The comments from Mark Hemsley, CEO of London-based Bats Europe, came as his counterpart at Euronext NV, an operator of exchanges in France, the Netherlands, Belgium and Portugal, warned the U.K.'s exit from the EU would put London's position in euro-denominated trading at risk. Bats Europe is the region's biggest stock exchange by value of shares traded.

"Unless we get an early and clear view on the U.K.'s negotiations with the EU, which I don't think is likely, we are highly likely to set up a eurozone legal entity [in addition to the London headquarters] just because it provides us with some certainty," Mr. Hemsley said.

Bats accounts for about a quarter of all European equities trading. In May, the exchange handled a daily average of €9.4 billion ($10.4 billion) of trades.

Mr. Hemsley said the move might not require a lot of staff to relocate—the majority could probably remain in London—but the amount of business put into the entity "could be increased or decreased depending on what our customers are doing in terms of their own Brexit planning."

Mr. Hemsley said the referendum result had the potential to put restrictions on EU customers wanting to trade in London, but could also restrict the exchange's ability to gain access to clearing facilities in Europe.

Meanwhile, Sté phane Boujnah, CEO of European exchange operator Euronext, reiterated his belief that the 30% to 45% of trading in euro-denominated assets done in London would only be acceptable while the U.K. was part of the single market.

Boujnah said: "What was normal when you share a common destiny, a common single market, a consistent regulation becomes an anomaly once London leaves the EU."

However, many lawyers and market practitioners believe there are no legal grounds on which the trading of euro-denominated transactions can be forced away from London. Lawyers say such a move would be highly complex and would have ramifications for the clearing of sterling products in the eurozone and euro products cleared in the U.S. and elsewhere.

Still, the comments reflect a fear that London's financial services industry could suffer once the U.K. leaves the EU, with several banks, including J.P. Morgan Chase & Co. and Morgan Stanley, already warning they would consider shifting some jobs to the continent.

Some U.K.-based proprietary trading firms, which are among Bats's largest customers, could move into the eurozone to provide certainty over access to markets such as the Euronext exchanges, Deutsche Bö rse and the large German futures market, Eurex.

The head of one large U.K.-based proprietary trading firm said it was "seriously considering" the implications of setting up a regulated entity in Amsterdam. Such a move is relatively easy for the firms given they have typically young workforces and little infrastructure on the ground.

The U.K.'s decision to split from the EU could also prove an obstacle to a planned £ 21 billion tie-up between the London Stock Exchange Group PLC and Germany's Deutsche Bö rse AG. BaFin, the German regulator, said that following Brexit the headquarters of the combined group would need to be located inside the European Union.

LSE investors are due to vote on the deal on July 4, while the tender offer for Deutsche Bö rse's shareholders will end on July 12. The two bourses have said that they remain fully committed to the terms of the deal, and the merger wasn't conditional on the result of the referendum.

Write to Nick Kostov at Nick.Kostov@wsj.com

(END) Dow Jones Newswires

June 30, 2016 11:45 ET (15:45 GMT)

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