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FCA tells EU that action is required to avoid Brexit disrupting financial markets

The UK Financial Conduct Authority has told the EU it must be more accommodating to avoid overlapping share trading rules damaging markets ‘to no good end’.

The UK Financial Conduct Authority (FCA) said that overlapping British and EU share trading rules will see market liquidity damaged ‘to no good end’ on Monday.

Officials in Brussels have warned that in the event of a no-deal Brexit, investment firms in the EU will be forced to trade approximately 6,200 euro-denominated stocks in the block, with the majority heavily trade on the London.

'It is therefore easy to conclude that for those shares, market liquidity would be damaged to no good end,' Financial Conduct Authority CEO Andrew Bailey said in a speech at Bloomberg.

FCA urges Brussels to permit temporary trading equivalence

To avoid the overlap from fragmenting trading, the FCA has requested the EU grant temporary equivalence, allowing cross-border share trading to continue in the event of a no-deal Brexit – something that Brussels has already granted for derivatives clearing.

However, the EU has so far rejected permitting temporary equivalence to rectify the issue.

FCA: EU and UK must advance no-deal preparations

The FCA admitted that financial sector preparations for a no deal Brexit have advanced over the course of this year, but that several issues remain one form or another which require further action, either in the UK or the EU.

Britain is set to leave the EU on October 31 and, as it stands, will bail out without a deal, with the UK government yet to agree a withdrawal agreement with the bloc.

‘We stand ready to enter into dialogue with our European counterparts before we finalise our approach,’ Bailey added.

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