EU, U.S. close to deal on stock exchanges before MIFID
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[November 16, 2017]
By Francesco Guarascio and Huw Jones
BRUSSELS (Reuters) - The European
Commission will grant equivalent status to trading venues in the United
States and Switzerland provided EU member states agree, draft documents
seen by Reuters said.
The final decision also depends on a positive outcome to talks with
Washington and Berne. While an informal deal has already been reached
with the United States, the situation remains unclear on Switzerland, a
senior Commission official told Reuters.
If confirmed, the moves would solve one of the major concerns for
investors before new MIFID II markets rules apply in January.
The EU's revamped Markets in Financial Instruments Directive, known as
MIFID II, comes into force on Jan 3. Without an equivalence decision, EU
investors in U.S. and Swiss equities would not be able to access more
liquid American and Swiss stock exchanges.
Draft documents submitted to EU states for their approval, and seen by
Reuters, say the Commission recognized the equivalence of 23 stock
exchanges in the United States, including the Nasdaq and the New York
Stock Exchange, and of the Swiss trading venues SIX Swiss Exchange and
It also recognized that 83 U.S. alternative trading venues, mostly run
by banks, were considered equivalent to EU-regulated exchanges.
EU states will have to back the decisions by Nov. 22.
In a letter to EU states, the commission said the equivalence decisions
on the U.S. and Swiss trading venues should be treated "as a matter of
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"This is work that is ongoing and we hope to have the adoption of an
equivalency decision before the end of the year," a commission's
spokeswoman told a news conference on Thursday.
Under equivalence decisions, the EU recognizes that rules of foreign
jurisdictions have the same objectives as EU provisions, granting access
to EU markets to foreign operators and vice-versa.
Equivalence decisions are subject to regular scrutiny and may be revoked
if foreign jurisdictions' rules change in ways that make them
incompatible with EU rules.
The senior Commission official told Reuters the EU had reached an
informal deal with the U.S. regulator on the mutual recognition of
domestic rules on trading venues, and the final agreement was "almost
certain" and imminent.
"An informal agreement has been reached between the European Commission
and the Commodity Futures Trading Commission under which the objectives
of MIFID 2 and American rules on trading venues are recognized as
equivalent," the official said.
Additional arrangements have to be signed to ensure exchange of
information and proper supervision of the entities that are deemed
The official declined to comment on the possible decision on the Swiss
trading venues, tacitly acknowledging that a deal with Switzerland may
be more complicated.
(Writing by Francesco Guarascio; Additional reporting by Philip
Blenkinsop; Editing by Catherine Evans)
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