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, 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.
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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 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.”