December 13, 2017 / 3:32 PM / 2 years ago

EU clears deal on U.S. stock exchanges removing major MiFID II hurdle

BRUSSELS (Reuters) - The European Commission adopted decisions on Wednesday to allow European investors to continue trading in shares listed in several stock exchanges in the United States, Australia and Hong Kong after new EU market rules come into force in January.

The move solves one major headache for equity investors who, without such a decision, could have been cut off from more liquid U.S. markets when the EU’s new financial markets regulations, known as MiFID II, enter into force on Jan. 3.

“It is important that European firms can trade shares on international markets. Access to major international trading venues will boost the EU’s competitive position as a financial center,” the EU executive’s vice president Valdis Dombrovskis said in a statement.

The decision to grant equivalence to several U.S. trading venues was largely expected, but was delayed after some EU states pushed for excluding most U.S. “dark pools” — private exchanges usually set up by investment banks to trade large quantities of securities, a practice sometimes criticized for its lack of transparency.

Under equivalence decisions, the EU recognizes that rules of foreign jurisdictions have the same objectives as EU provisions, granting foreign operators access to its markets and vice-versa.

The commission’s decision concerns more than 20 regular exchanges in the United States, including Nasdaq and the New York Stock Exchange, and more than 30 U.S. dark pools. The commission had initially proposed to grant equivalence to more than 80 alternative exchanges.

The Stock Exchange of Hong Kong and Australia’s ASX and Chi-X Australia Pty were also deemed equivalent.

Under the adopted decision, European “investment firms can continue to access the liquidity in dual listed shares outside the EU” in the authorized trading venues, the commission said.


Similar decisions for stock exchanges in other foreign countries are still under consideration, the commission said.

It plans to decide on the equivalence of Switzerland’s SIX Swiss Exchange and BX Swiss on Dec. 20, according to a draft agenda of the weekly meeting of EU commissioners.

Markus Ferber, deputy chair of the economic committee of the EU parliament, told Reuters the delay of the Swiss decision could have a political component, as the EU Commission wants Switzerland to make some concessions on its access to the single market.

That could be a delicate issue “in light of not setting a precedent for the Brexit negotiations,” he said.

Reporting by Francesco Guarascio; Editing by Peter Graff

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