FCA to use transitional power to avoid post-Brexit chaos for trading venues

The Financial Conduct Authority announced that it will use temporary transitional power to avoid trading disruption and allow firms to continue trading in EU venues at the end of the Brexit transition period on 31 December.

The City Watchdog set out its approach to rules that govern how and where shares are traded on 4 November, as the Brexit talks restart after initially falling through in mid-October and the possibility of general equivalence, which would regard UK financial regulation as in line with regulation in the other 27 EU states, remains unclear.

The FCA said that transitional directions will be published before the end of the transition period to implement the changes and that it will keep the approach “under review” should there be further developments.

The regulator said in its 4 November statement that it will be discussing the steps needed to “protect the integrity of markets in the UK” with market participants and trading venues. Part of the discussions will include whether MiFID II – the wide-ranging European rules dubbed, transparency calibrations – will remain “appropriate” for the UK in the absence of equivalence.

“At the end of the transition period, the UK’s and EU’s regimes will be the most equivalent in the world, but as it stands this has not been recognised by the EU,” said Nausicaa Delfas, executive director of international at the FCA, in a statement.

“While we note ESMA’s recent clarifications to reduce the potential overlap of an EU and UK STO, we chose this simple and comprehensive approach rather than to replicate restrictions based on the jurisdiction of the share issuer, or the currency in which a share is issued,” she added.

Reacting to the announcement, John Liver, UK financial services partner at EY, said: “In the event that mutual equivalence is not an option, what the FCA statement today signals is the UK’s openness to international markets and a boost to competition and choice that will be welcomed by the industry, and should benefit those looking for the most efficient ways of investing across European financial markets, both in the UK and within the EU.”

To contact the author of this story with feedback or news, email Bérengère Sim

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