The hardline stance by European Union regulators on share trading could split markets and damage prices for investors if there is a no-deal Brexit next week, a top exchanges industry official said on Wednesday. The European Securities and Markets Authority (ESMA) on Tuesday identified 6,200 shares that EU investors can only trade inside the bloc if Britain left without a deal on March 29.
Britain's Financial Conduct Authority (FCA) hit back, saying that ESMA's stance risked disrupting markets, raising fears of a tit-for-tat move to force UK customers to trade EU shares only in London and thereby splitting liquidity.
Alasdair Haynes, chief executive of Aquis Exchange, said that a "horror story" could be unfolding for markets.
"Is this a land grab? To a certain extent," he told Reuters.
Launched in November 2013, Aquis now accounts for about 4 percent of pan-European share trading, using a novel form of pricing to take on incumbents such as Cboe, which has more than a fifth of the market.
AHaynes, a 40-year veteran in the industry, said he has never seen such an overt clash between regulators.
"It was a pretty harsh response," he said. "This is regulators fighting in public. Your chances for equivalence went out the door last night."
Brussels has said that clearing houses in London would gain equivalence for a year if there is a no-deal Brexit, meaning that EU customers could continue using them for a limited time.
This was not extended to trading platforms in London, used by asset managers and banks from across the continent.
Christian Voigt, senior regulatory adviser at trading technology firm Fidessa, said emotions were running high after ESMA's statement left market participants disappointed.
"While arguing what the regulator could have done, we shouldn't forget that it is all caused by a political decision not to grant equivalence," Voigt said.
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