EU Softens Post-Brexit Limit on London Trading After Rebuke
EU Tones Down Post-Brexit Limits on London Trading After Rebuke
(Bloomberg) --
European Union regulators walked back a policy that would have blocked some equity trading on London exchanges after Brexit, following criticism from money mangers and officials in the U.K.
EU investors will be able to trade all U.K. stocks on London venues even if the country leaves the bloc without a withdrawal agreement, the European Securities and Markets Authority said Wednesday, reversing guidance issued in March. The new approach is more likely to minimize the risk of disruption, the regulator said.
Under the initial plan, EU investment firms would have had to trade certain shares within the bloc, even if a stock’s main listing is in London, potentially affecting stocks like AstraZeneca Plc, Rio Tinto Plc and Vodafone Group Plc. Money managers have said the policy would keep them from trading efficiently and expose them to overlapping rules for U.K. and EU stocks.
The U.K.’s Financial Conduct Authority said it’s “encouraged that ESMA has taken steps to reduce the disruption.” But not all of its concerns have been addressed, it said, citing the example of EU stocks that are mainly traded in the U.K.
“Some shares have their main or only center of market liquidity outside the country in which the issuer is incorporated,” the FCA said in a statement. “This approach would place restrictions on a company’s access to investors and freedom to choose where they seek a listing on a public stock market.”
ESMA said the revision followed discussions with the FCA and a consideration of the feedback received since March. EU investors would still be barred from trading some 6,200 European stocks in the U.K. in a no-deal Brexit.
Today’s announcement “is a great success for the industry and for investors,” the German Investment Funds Association BVI said in an email. It also urged a solution for Irish shares that are primarily traded in London.
To contact the reporter on this story: Alexander Weber in Brussels at aweber45@bloomberg.net
To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net, Christian Baumgaertel, Keith Campbell
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