© Reuters. FILE PHOTO: A worker looks at their phone as they walk past The Gherkin, Lloyds, and other office buildings in the City of London

By Alun John

HONG KONG (Reuters) – The European Union’s markets watchdog should reconsider its ban on trading thousands of shares outside the bloc if there is a no-deal Brexit, a senior French government official said on Wednesday.

The European Securities and Markets Authority (ESMA) stunned exchanges last month when it said that if Britain leaves the EU without a deal, 6,200 mostly EU-listed shares, but also 14 UK stocks, could only be traded on platforms inside the bloc.

London is Europe’s biggest share trading centre, used by fund managers from across the continent who would be forced to accept less attractive prices if cut off from Britain.

“The good thing is that ESMA has taken a decision, sometimes you see that in other places it is difficult to have a decision,” said Sebastien Raspiller, head of the financial sector department at France’s finance ministry.

“The bad news is that the decision was not good, so I hope that ESMA would be able to reconsider its position,” Raspiller told the annual meeting of derivatives industry body ISDA in Hong Kong.

ESMA’s so-called “share trading obligation” decision has been described by some industry officials as a “land grab” by an EU keen to build up its own capital markets as Britain leaves the bloc.

Pan-European share trading platforms Cboe, Turquoise (part of the London Stock Exchange) and Aquis Exchange have had to change their no-deal Brexit plans in recent days following ESMA’s ruling, warning that splitting trading liquidity would hurt investors.

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Britain’s markets watchdog, the Financial Conduct Authority (FCA), has called on ESMA to discuss the ruling. The FCA could reciprocate with a ban on trading UK and even some liquid EU shares outside the United Kingdom.

Britain’s Prime Minister Theresa May is asking EU leaders on Wednesday for a further delay to Brexit until at least the end of June, and Raspiller said uncertainty over Brexit was damaging for market participants.

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