London Fights Back Against Europe's Post-Brexit Trading Grab
London Fights Back Against Europe's Post-Brexit Trading Grab
(Bloomberg) -- The European Union faced mounting opposition to its policy restricting access to U.K. equity markets in a no-deal Brexit, with the world’s biggest banks, money managers and the London Stock Exchange Group Plc calling for the EU to reverse course.
At issue is a policy announced last week that would require EU investment firms to trade certain blue-chip shares including Vodafone Group Plc and Rio Tinto Plc on venues in the bloc. The vast majority of these transactions currently take place in London.
The last-minute fracas threatens to disrupt months of cooperation between regulators on both sides to protect financial markets if the U.K. leaves the EU without a withdrawal accord.
The LSE said the policy applies to one-third of the FTSE 100 by market capitalization, around 10 percent of other major European benchmarks, as well as some shares that have scant liquidity on EU venues.
“London Stock Exchange firmly believes that global capital markets are best served by continued access for all participants and service providers in a non-discriminatory manner,” the exchange said in a notice dated March 28 and published on its website.
Meanwhile, the Association for Financial Markets in Europe said in a March 27 letter that the EU policy “will have a negative impact on European investors, who will suffer from an increasingly fragmented trading landscape, incur significantly higher costs of execution and be forced to deal with an inability to access optimal prices and volumes.”
The group, which represents banks, brokerages, law firms, and exchanges, also warned the U.K. government against retaliation by restricting British investors from trading equities on EU exchanges. The bloc’s markets regulator, the European Securities and Markets Authority, unveiled the measure on March 19.
AFME called for the EU and U.K. to grant equivalence that would allow trading to continue across the Channel, at least on a temporary basis. The European Commission has, however, restricted itself to protecting financial stability on the Continent, making clear that it won’t mitigate every negative effect of a no-deal Brexit. The EU executive declined to comment on AFME’s letter.
“Equivalence would solve this but you can bet the EU won’t grant it.” said Alasdair Haynes, CEO at Aquis Exchange Plc. “It’s a naïve perception that you can force trading in the EU 27 to build liquidity.”
Bloomberg LP, the parent of Bloomberg News, is a member of AFME, according to the group’s website.
To contact the reporters on this story: Silla Brush in London at sbrush@bloomberg.net;Alexander Weber in Brussels at aweber45@bloomberg.net;Viren Vaghela in London at vvaghela1@bloomberg.net
To contact the editors responsible for this story: Ambereen Choudhury at achoudhury@bloomberg.net, Marion Dakers, Paul Armstrong
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