The United Kingdom’s Financial Conduct Authority (FCA) issued its guidelines on Wednesday towards the share trading obligations (STO), allowing British companies to approach European Union exchanges for share trading following the expiry of the Brexit transition period.
These guidelines from the British regulator came only over a week after its European Union counterpart released its approach towards STO post-Brexit .
The FCA highlighted that only ‘mutual equivalence’ would guarantee the businesses to satisfy the STO obligations in both jurisdictions. And if not, the British regulator will use the Temporary Transitional Power (TTP) to avoid disruption allowing firms to continue trading all shares on EU trading venues and systematic internalisers (SIs).
Though this approach will allow UK market participants to access the EU trading venues post-Brexit, they need to ensure certain regulatory obligations.
The regulator highlighted that the guidelines will ensure an open market structure as the UK-based companies will be free to execute trades at the venues offering the best Execution .
“At the end of the transition period, the UK’s and EU’s regimes will be the most equivalent in the world, but as it stands this has not been recognized by the EU,” FCA’s international executive director, Nausicaa Delfas said.
An Opposite Approach by ESMA
The European Securities and Markets Authority (ESMA) earlier ordered the execution of share trades within the European Union following the expiry of the Brexit transition. However, it will allow trading of the EU-listed shares on platforms in London if they are traded in pound sterling.
“While we note ESMA’s recent clarifications to reduce the potential overlap of an EU and UK STO, we chose this simple and comprehensive approach rather than to replicate restrictions based on the jurisdiction of the share issuer, or the currency in which a share is issued,” Delfas added.
“We have taken this approach to ensure UK-based investors and asset managers continue to have the freedom to find the best possible trading terms and to get the best outcome for themselves and their customers.”
