LONDON, March 2 (Reuters) - Exploiting loopholes in European Union rules could bar Britain from accessing the bloc’s securities markets after Brexit, a senior member of the European Parliament said on Thursday.
New EU rules to increase transparency in securities markets come into force in January 2018, just over a year before Britain is set to leave the bloc.
Kay Swinburne, a centre right British MEP, told an audience of financial industry officials not to exploit loopholes in these new rules after Brexit otherwise Britain’s ability to access the EU market under so-called “equivalence” terms would be jeopardised.
Financial services firms in countries outside the EU can currently sell products to European investors as long as their home rules are deemed as strict as those in the bloc.
Swinburne said the process for Brussels to decide if a country’s rules are “equivalent” should be straightforward, but politics was also going to play its part.
She said the EU took four years to deem one U.S. derivatives market rule equivalent, and British firms would have to abide by the spirit and not just the letter of the EU rules.
“If the UK is seen not to be doing the right thing, there will be a backlash,” Swinburne told a FIX Trading conference.
She said EU regulators needed to clarify an element of the new securities rules, known as MifID II, that covers “systematic internalisers” or SIs, which refers to banks matching sell and buy orders for shares inhouse.
The EU regulators are being asked to confirm that linking SIs - which effectively creates a wider, less regulated off exchange market - should not be not allowed under MiFID II, Swinburne said.
Reporting by Huw Jones. Editing by Jane Merriman