The UK will authorise stock trading in the EU after Brexit

The UK FCA (Financial Conduct Authority) recently released its guidelines for equity trading obligations, allowing UK companies to apply to EU stock exchanges after the end of the December Brexit transition period.

These guidelines from the UK regulator come just after its European Union counterpart published its approach to post-Brexit stock trading.

The Federal Supervisory Authority says that only "mutual equivalence" would guarantee companies to meet the obligations of trading shares in both jurisdictions. Otherwise, the UK regulator will use its temporary transitional power to avoid disruption, allowing companies to continue trading all their shares on EU stock exchanges and systematic internalisers.

Although this approach allows UK players to access EU trading systems after Brexit, they will have to meet certain regulatory obligations.

The regulator stresses that the guidelines will ensure an open market structure, as UK-based companies will be free to execute their trades at the venues offering the best execution.

"At the end of the transition period, the UK and EU regimes will be the most equivalent in the world, but as it stands, this has not been recognised by the EU", says FCA Director Nausicaa Delfas.

The ESMA's different approach

The ESMA (European Securities and Markets Authority) had previously ordered the execution of equity trades within the European Union after the expiration of the Brexit transition. However, it will allow shares listed in the European Union to be traded on UK platforms if they are traded in British pounds.

"While we take note of recent ESMA clarifications aimed at reducing the potential overlap of EU and UK equity trading obligations, we have chosen this simple and comprehensive approach rather than replicating the restrictions based on on the jurisdiction of the share issuer, or the currency in which a share is issued,” adds Delfas.

"We have taken this approach to ensure that UK based traders and asset managers continue to have the freedom to find the best possible trading conditions and achieve the best results for themselves and their clients.".