U.K. Eases Requirements on EU Stocks to Keep Trading in London
(Bloomberg) -- Britain’s markets watchdog plans to ease stock-trading requirements to entice investors to do business in London after the end of the Brexit transition period.
The Financial Conduct Authority said that if the European Union doesn’t grant easy cross-border access to London trading venues, it will then remove certain hurdles to trading European companies’ shares in the U.K. from Jan. 1.
Under the FCA plan released on Wednesday, the regulator will free trading in some European shares from some of the transparency requirements under the MiFID II law and deem them illiquid. This would allow more business, especially big block orders, to be handled in London on so-called systematic internalizer platforms operated by some of the world’s biggest banks, brokers and proprietary trading firms.
“It’s an attempt to keep volumes up in the U.K. and make it less attractive for rest-of-world firms to deal in those instruments on EU venues,” said Sam Tyfield, a partner at Shoosmiths LLP.
The FCA said it was publishing the guidance now ahead of what could be a “significant evolution in the pattern of trading” in European shares.
With Brexit talks still hanging in the balance, London Stock Exchange Group Plc, Cboe Global Markets Inc., Goldman Sachs Group Inc. and other trading firms have been setting up venues in the EU to handle European clients’ trades next year.
The European Commission, the EU’s executive arm, has so far withheld granting an “equivalence” decision to allow European investors to trade easily in London, raising the prospect of a “big bang” move in trading volume to Amsterdam and Paris from London.
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