The European Commission is tightening up the trading rules of the EU's securities market. It is an attempt to close up any potential loopholes for regulatory arbitrage that could become apparent when the UK takes its Brexit from the union and returns to the laws of its own land. Regulators have become increasingly concerned that foreign financial firms will try to exploit the differences in "equivalence provisions" between the two jurisdictions. But what the rules are, and who they apply to, is anybody's guess; not even the regulators can tell you.
The European Commission allows trading platforms, brokers and other companies based in non-EU financial centres to serve their clients in the trading bloc's financial markets.
It is referred to as an equivalence relationship and is currently extended to over 30 outsider countries across the world, including New York and Hong Kong, and until quite recently Switzerland.
The Financial Instruments Directive (MiFID) prescribes that security trades across the border and on the equivalent exchanges are facilitated via a multilateral trading facility (MTF).
It is a cross-border platform that brings together multiple third-party buying and selling interests in financial instruments from another bourse.
The directive was released at the end of...