The European Securities and Markets Authority has published an updated statement on the impact of Brexit on the trading obligation for shares where no decision on the U.K.'s equivalence as a third country market has been made. The EU Markets in Financial Instruments Regulation requires investment firms to conclude transactions in shares admitted to trading on a regulated market or traded on an EU trading venue, i.e., namely regulated markets, multilateral trading facilities, systematic internalisers and equivalent third-country trading venues. The U.K. has adopted this requirement in its onshored MiFID II legislation. Similarly, following its exit from the EU, the new U.K. onshored share trading obligation would restrict the trading of shares in the U.K. to trades on U.K. trading venues unless a third-country equivalence decision was made.
ESMA's updated statement specifically addresses the position under the EU share trading obligation where a share with an EEA ISIN is traded on a U.K. trading venue and is denominated in pounds sterling. ESMA states that these trades will not be subject to the EU share trading obligation because it can be "reasonably assumed" that such trading by EU investment firms occurs on a non-systematic, ad hoc, irregular and infrequent basis. ESMA confirms that its previous guidance, last published in May 2019, remains valid.