Thursday 6 February 2020 12:44 pm

EU markets watchdog clashes with City regulator over post-Brexit trading rules

The EU’s markets watchdog has asked its British counterpart to ensure that the London Metal Exchange (LME) and ICE Futures Europe fully comply with the bloc’s rules on market transparency for commodity derivatives. 

In the latest in a series of spats over the future relationship between EU and UK markets post-Brexit, the European Securities and Markets Authority (ESMA) said it “encourages” the Financial Conduct Authority (FCA) to “employ timely” measures to ensure compliance with transparency obligations.

In response, the FCA said it does “not share” ESMA’s view that it has “taken no appropriate action” on the matter.

“We want to ensure that implementation happens in such a way so as not to disrupt trading, which would affect end-users of these markets.  We expect this work to be completed by the middle of the year,” an FCA spokesperson said. 

The clash between the two watchdog comes less than a week after Britain’s official departure from the EU. 

All of the bloc’s financial rules will continue to apply in the UK during a transition period until the end of this year.

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The level of access UK financial firms will have to EU markets after the end of the transition period is yet to be decided. Britain is seeking future access to EU markets based on its system of equivalence — where the bloc allows access to a non-EU country after judging its rules to be equally tough.

It has been a tumultuous few days for relations between UK and EU financial authorities. Earlier this week, ESMA had offered a Brexit olive branch to the UK when the watchdog proposed making it easier for EU investors to use trading platforms in the UK after the end of the transition period. 

But reports yesterday suggested EU officials were looking to amend the bloc’s Mifid II financial regulations in a bid to weaken the City of London following Brexit. 

The LME said today that it had prioritised market consultation in its implementation of pre-trade transparency. 

“This active engagement with members and clients has allowed the scoping of a solution which reflects the specificities of our market, and we look forward to working closely with all stakeholders to implement the solution by mid-2020,” the group said in a statement. 

ESMA declined to respond to the FCA’s statement. City A.M. has contacted ICE Futures Europe for comment.