The financial watchdog hit out at the EU as it announced that British investors will be allowed to keep trading shares on European exchanges even if the UK does not strike a deal with the bloc before the end of the year.
The watchdog said the temporary transitional permission, which will apply until March 31 2022, will avoid market disruption and ensure open markets and competition between financial centres.
The move goes further than the EU’s reciprocal measures on trading by European investors on London-listed shares, which will be permitted only in limited circumstances.
The temporary permissions will apply if the EU does not agree to treat the UK’s financial rulebook as equivalent to its own at the end of the Brexit transition on Dec 31.
Nausicaa Delfas, who heads the FCA’s international unit, said: “We have taken this approach to ensure UK-based investors and asset managers continue to have the freedom to find the best possible trading terms, and to get the best outcome for themselves and their customers.
“We want to preserve freedom for issuers from all jurisdictions to choose where and how to raise capital to support their business activities.”
The regulator expressed frustration that the EU is taking a more restrictive approach.
In a thinly veiled criticism of the EU’s approach, Ms Delfas said: “At the end of the transition period, the UK’s and EU’s regimes will be the most equivalent in the world, but as it stands this has not been recognised by the EU.”
The FCA has signalled that it will seek to maintain the UK’s reputation as for highly regulated financial markets but warned that it could deviate from Europe’s rules if Brussels does not recognise the UK’s rules as being equivalent to its own.
The watchdog said its talks with firms about how to regulate UK markets will include whether aspects of Mifid are suitable for the UK if it does not have full access to European markets.