LONDON (Reuters) - Britain’s financial watchdog published on Friday a consultation paper on implementing a reform of European Union securities markets, signaling to banks that last month’s vote by Britons to leave the EU must not derail preparations for the new rules.
The bloc’s MiFID II reform will bring in sweeping changes to securities markets by tightening controls of commodities, injecting more transparency into trading, and playing regulatory catch up with ultra-fast share orders.
The rules come into force in January 2018, only a year before some UK government ministers want Britain to have completed negotiations to leave the EU.
Financial Conduct Authority Chief Executive Andrew Bailey said MiFID II reflected themes of UK conduct regulation and implemented international commitments that Britain had backed - meaning such rules would remain in place after leaving the EU.
“As we said in our statement following the EU referendum, firms must continue to abide by their obligations under UK law, including those derived from EU law and continue with implementation plans for legislation that is still to come into effect,” Bailey said in a statement.
He has already warned there won’t be a “bonfire of regulations” after leaving the EU.
The new European securities law will also introduce the ability for countries outside the bloc to offer their services to European customers if they can show that their own rules are “equivalent” or as strict as those in the EU.
Lawyers have said this would mean Britain can leave the EU’s single market as its financial services sector could rely on the equivalence regime to continue operating across the bloc.
Critics say the equivalence system is untested, prone to political interference, and hard to maintain if the bloc makes changes to its rules which Britain may not agree with.
Reporting by Huw Jones; Editing by Mark Potter