Wednesday 4 November 2020 10:44 am

Brexit: UK and EU clash on share trading rules

Square Mile banks and asset managers can use exchanges from the European Union to trade shares from January, creating a cross-border clash in securities rules for investors.

Access to the bloc ends on 31 December following the UK’s departure from the EU in January, leaving both sides to decide where investors in their jurisdictions are obliged to trade shares.

Today the Financial Conduct Authority (FCA) has said it would allow firms to continue from January trading all shares on trading venues from the EU where they choose to do so, rather than limiting themselves to platforms headquartered in the UK.

The EU’s securities watchdog ESMA has already said that investors from the bloc can only trade sterling-denominated shares in London on platforms like the London Stock Exchange’s Turquoise, Cboe, and Aquis Exchange.

“Any restriction on the trading of shares based on currency does not reflect the multicurrency nature of global capital markets and limits the ability of firms to determine how best to use global capital markets to support economic activity,” the FCA said in a statement.

Oblige investors

Brussels had hoped that Britain would oblige investors in the UK to use domestic platforms to avoid a clash in regulatory requirements.

FCA executive director of international Nausicaa Delfas said: “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. 

“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.”