Wednesday 29 May 2019 10:37 am

UK regulators cautiously welcome EU backtrack on no-deal share trading rules

UK regulators have welcomed a move by their EU counterparts to backtrack on rules that would have stopped European investors from trading shares in some of the biggest British companies in London after a no-deal Brexit.

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However, the Financial Conduct Authority (FCA) said the EU’s watered-down plans “would still cause disruption to investors” and damage liquidity by limiting which shares could be traded where in the event of no deal.


In March, the European Securities and Markets Authority (Esma) laid out a list of over 6,000 stocks that EU-based investors would have to trade in the bloc rather than in London should Britain crash out without a deal.

The list included 14 stocks which have a UK international securities identification number (ISIN), such as the giant companies Shell, BHP, and G4S. The City was up in arms about the rule, labelling it a grab for London’s business.

This morning, Esma announced it would take the 14 UK-registered stocks off the list, saying the move would “mitigate potential adverse effects” of the trading rule.

The FCA today said it was “encouraged that Esma has taken steps to reduce the disruption that would be caused” by the rule.

Yet it also said the broad scope of the regulations, which still apply to many thousands of EU-registered shares, would lead to “fragmentation of markets and liquidity in both the EU and UK”.

Many EU shares have both a listing and their main market in the UK, the regulator said, meaning a rule to stop them being traded in London would damage “a company’s access to investors and freedom to choose where they seek a listing on a public stock market”.

The UK regulator said maintaining “the status quo for a limited period of time after exit remains an alternative way of mitigating disruption whilst longer term solutions are found”.


The more stringent Esma rules were planned to come into force on 29 March, Britain’s original departure date from the EU. However, Brexit has since been extended to 31 October, although a no-deal exit remains on the cards.

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The FCA said: “We will set out our approach if it is clear that there will be a no-deal exit, including our expectations of how firms can comply with applicable requirements.”

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