FCA Pushes Back Against ESMA Share Trading Rules

The Financial Conduct Authority (FCA) is pushing back against share trading rules that the European Securities and Markets Authority (ESMA) is trying to implement in the wake of a no-deal Brexit.

In a statement issued on Wednesday morning, the British regulator acknowledged the one positive change in stance that ESMA has made.

Back in March, the European regulator said that it would be formulating share trading obligations (STOs) that would mean companies could not trade UK or EU shares in Britain - even if the company were itself based and/or listed in the UK.

According to the statement published by the FCA on Wednesday, ESMA has now ‘softened’ its stance.

EU companies will, in the event of a no deal Brexit Brexit Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum. In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019. Active Prime Minis Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum. In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019. Active Prime Minis Read this Term, be able to trade British stocks in the UK.

But some of the prior rules look set to stay in place if ESMA gets its way.

That would mean an EU company, which listed its shares on a UK stock exchange, would not be accessible to companies trading in the pan-European political body.

Bad for the EU, bad for the UK

This is likely to be problematic for both UK exchanges and the companies that list on them. Yes, the FCA - entirely understandably -wants to support British interests.

But for EU companies, this could also be bad news. Even if a firm is based in the EU, its most, perhaps only, liquid market for share trading could be in the UK.

Thus, preventing EU investment companies from accessing UK markets could, paradoxically, hinder their ability to trade in EU companies.

“Some shares have their main or only centre of market Liquidity Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent Read this Term outside the country in which the issuer is incorporated,” said the FCA in its statement.

“[ESMA’s] 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.”