EU watchdog tweaks post-Brexit share trading rule

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Banks in the European Union can continue buying and selling EU-listed shares traded in sterling on platforms in the City of London after the Brexit transition period ends in December, the bloc’s securities watchdog said on Monday.

The European Securities and Markets Authority (ESMA) set out its revised “share trading obligation”, or STO, that mandates where banks and other users of stock markets must trade EU-listed shares after Dec. 31, when Britain’s full access to the bloc ends.

Shares listed on exchanges inside the bloc can still be traded on platforms in London if they are traded in sterling, ESMA said in a statement, meaning that trades in euros must be carried out inside the bloc.

London-based pan-European platforms Cboe, the London Stock Exchange’s Turquoise, and Aquis Exchange trade shares listed on EU exchanges, but it was unclear if this would have to end on Dec. 31 for their bloc-based customers.

“This revised guidance aims at addressing the specific situation of the small number of EU issuers whose shares are mainly traded on UK trading venues in pounds,” ESMA said.

ESMA said it has done the “maximum possible” to avoid a clash with Britain over where shares must be traded from January.

Britain, however, has yet to set out its own rules on trading of EU-listed shares by investors from outside the bloc.

A clash between the EU and UK approaches could split trading, a step that banks says would harm prices.

Cboe, Turquoise and Aquis have already opened hubs in the EU to offer euro-denominated trading in EU-listed shares to avoid disruption to clients from such a clash.

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