Britain sets up share trading clash with EU

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LONDON (Reuters) – Banks and asset managers in Britain can use exchanges from the European Union to trade shares from January, Britain’s financial regulator said on Wednesday, creating a cross-border clash in securities rules for investors.

Britain left the EU in January and access to the bloc ends on Dec. 31, leaving both sides to decide where investors in their jurisdictions are obliged to trade shares.

The EU’s securities watchdog ESMA has already said that investors from the bloc can only trade sterling-denominated shares in London, Europe’s centre for multi-currency cross-border stock trading on platforms like the London Stock Exchange’s Turquoise, Cboe, and Aquis Exchange.

But Britain’s Financial Conduct Authority said on Wednesday it would allow firms to continue from January trading all shares on trading venues from the EU where they choose to do so, rather than limiting themselves to platforms headquartered in Britain.

“Any restriction on the trading of shares based on currency does not reflect the multicurrency nature of global capital markets and limits the ability of firms to determine how best to use global capital markets to support economic activity,” the FCA said in a statement.

Brussels had hoped that Britain would oblige investors in the United Kingdom to use domestic platforms to avoid a clash in regulatory requirements.

The FCA said it remains open to discussing with ESMA how to minimise any disruption that could arise from overlapping requirements on financial counterparties.

“Our approach, driven by our objectives, will preserve the ability of UK-based firms to execute their share trades at the venues where they can get the best outcomes for themselves and their customers,” the FCA said.