OSLO (Reuters) - A sweeping reform of European Union securities rules to apply lessons from the 2008 financial crisis may need to be adapted after Britain leaves the bloc, a senior regulatory official said on Thursday.
The new rules, known as MiFID II, will be introduced in January 2018 with the aim of making EU bond and commodities markets more transparent.
Asked whether these rules could work without Britain - by far the bloc’s biggest securities market - having access to the EU market, Verena Ross, head of the European Securities and Markets Authority (ESMA), said adjustments might be needed.
“It can work, yes. We might need to review the specifics if the UK is not in the European Union by that stage,” she told Reuters on the sidelines of a financial stability conference in Oslo.
“But at the moment, the clear position from the UK FCA (Financial Conduct Authority)... is that they are preparing for MiFID II implementation and that it will continue for the time being.”
Financial industry officials have said that if banks, trading venues and clearing houses based in Britain failed to have adequate access to the EU’s single market after Brexit, the volume of data needed to make MiFID rules work in practice would be lacking.
For example, the new rules impose transparency requirements on bonds if they are frequently traded, but this could be hard for ESMA to define if a major source of liquidity was taken away.
London is a major trading venue for commodities and will provide much of the data needed for ESMA to impose limits on how large a position any individual trader can have in a commodity.
Ross said this set of regulations covered many aspects that were “at least as important for the EU 27 as ...for the UK”.
“Of course the UK plays a big part in these markets. But the rules that are there for MiFID II make sense for any national market.”
Ross said it was too early to say what other aspects of ESMA’s work could be affected by Brexit.”We are looking at the different scenarios to find out what the potential implications could be.”
Additional reporting by Huw Jones in London, editing by John Stonestreet
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