Compromising on trading obligation

Today ESMA changed their mind on the share trading obligation (STO) in the event of a No-Deal Brexit. Under their new approach, any ISIN with the GB country code is now out of scope. Obviously, this change reduces the number of ISINs where EU buy-sides are forced to trade at home. Most importantly, among those instruments no longer subject to the STO are the 14 highly liquid shares that triggered the initial market uproar. While this is a step in the right direction, the FCA highlights that even the new approach will cause some disruption.

Whether ESMA will change their guidance again remains to be seen, but today’s decision has alleviated some of the fall-out if there is to be a No-Deal Brexit. It would be great if the EU could also take a look at the equivalence decision for trading venues, where a similar problem persists. And once that’s done, we just need to figure out what kind of Brexit we’re going to have.