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The Brexit Share Trading Exodus

February 11, 2021
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The Trade

THE TRADE NEWS

Looking ahead

With the trading of EU shares seemingly gone for now, the UK has looked at other ways to foster interest in alternative pools of liquidity through regulatory divergence.

MiFID II is an EU regulation, however, Brexit has given the UK leeway to amend some of these rules. For example, the UK’s Financial Conduct Authority (FCA) has made several regulatory changes in a bid to increase dark pool trading in the UK.

Earlier this year, the watchdog lowered the large-in-scale (LIS) thresholds for dark pool trading to €15,000, meaning that in the UK if a transaction is above €15,000, it can trade in a dark pool. In the EU, the minimum threshold for using a dark pool is €650,000, now significantly higher compared to the UK.

“[The UK’s lower LIS threshold] potentially makes it easier for non-EU firms to trade EU stocks in UK dark pools like Turquoise Block Discovery UK or Cboe LIS UK,” says Anish Puaar, European market structure analyst at Rosenblatt Securities.

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