The issue to watch: Warning of MiFID II-driven liquidity 'cliff edge' under no-deal Brexit

Regulation concerns

Concerns have been raised that EU-based asset managers will be cut off from trading on UK venues such as the London Stock Exchange (LSE), creating the potential for a "cliff edge of liquidity" in the UK market in the event of a no-deal Brexit.

According to Lorraine Johnston, regulatory counsel at law firm Ashurst, the share trading obligation of MiFID II, which came into force in January, prevents firms based in the bloc from trading on venues outside the EU. Kames' Holmes: Why I'd rather own a McLaren than a Ferrari in a hard Brexit Johnston explained: "If you are an EU MiFID firm, you are limited to where you can place trading orders to venues that are EU trading venues. In the event of no deal, EU asset managers would no longer have access to the LSE or the AIM, for example.  "The liquidity of those markets is likely ...