European firms can continue to trade dual-listed stocks on U.S. exchanges once new trading rules become effective, the European Commission said.
The commission also took similar positions about equivalence for trading on Hong Kong and Australia exchanges.
New trading rules under the Markets in Financial Instruments Directive II become effective Jan. 3. "The EU trading obligation applies to shares listed on both exchanges in the United States ('dual listings'), on condition that trading in the EU is a significant percentage of the global trading volume," said a statement from the European Commission. "Today's decisions ensures that (MiFID II) investment firms can continue to access the EU."
The commission added that there is no evidence that shares listed only in Australia, Hong Kong and the U.S. trade significantly in the EU. "Therefore, trading in these shares can continue as previously," the commission added.
"It is important that European firms can trade shares on international markets," said Valdis Dombrovskis, vice president in charge of financial stability, financial services and capital markets union at the European Commission, in the statement. "It is an important step in building a vibrant capital markets union."
"Without this equivalence ruling, European firms would have been forced to trade U.S. and many other foreign stocks on EU-based markets like Deutsche Borse," said Anish Puaar, market structure analyst, Europe at Rosenblatt Securities, in an email. "Instead of taking this route, and trading foreign stocks on EU markets that have extremely low levels of liquidity, some EU firms may have simply stopped offering trading in these names, leading to reduced trading volumes."