The European Securities and Markets Authority explained its approach to adopting some key second Markets in Financial Instruments Directive, or MiFID II, and benchmark provisions in the event that Britain leaves the EU without a deal.
Trading facilities established in the U.K. will no longer be considered EU trading venues in the event of a no-deal Brexit, effective March 30.
Transactions carried out on U.K. trading venues would be considered over-the-counter transactions, with U.K. venues to be subject to certain specific post-trade transparency requirements.
ESMA also clarified that it wishes to avoid double-reporting and including commodity derivatives contracts traded on third-country venues in the position limit regime, and said it had set out two opinions on this in 2017.
The first clarified that firms trading on such venues meeting certain criteria are not required to make transactions public via an approved publication arrangement; the second clarified that commodity derivatives contracts traded on such venues, meeting certain criteria, are not considered as economically equivalent OTC contracts for the position limit regime.
ESMA has not yet assessed any U.K. trading venue against these criteria so far, but is ready to do so. Pending the outcome, investment firms in the EU will not be required to make these transactions public via an APA.