Market making exemptions and preparing for Brexit

If you’re a firm that intends to use market making exemptions from January 2021, you need to notify us before the end of the transition period.

The UK left the EU on 31 January 2020 and entered a transition period which ends at 11pm on 31 December 2020. During the transition period, the EU short selling regulation (Regulation (EU) 236/2012) (the SSR) continues to apply in the UK, including the market making exemption.

Notification to use the market making exemption from the end of the transition period

At the end of the transition period the SSR will be converted into UK law and the amendments made under the Short Selling (Amendment) Regulations 2018 to will take effect (the ‘onshored SSR’).

Under the onshored SSR, any firm wishing to use the exemption for transactions due to market making activities will be required to join a UK trading venue (unless an equivalence decision has been made) and notify the FCA of their intention to use the market maker exemption in writing 30 days ahead of their intended use.

Notices of intention given to the FCA before the end of the transition period will remain valid.

Accordingly, firms that have already notified the FCA of an intention to use the market maker exemption and remain members of a UK trading venue will be able to continue using the exemption after the transition period comes to an end only for instruments traded on UK trading venues.

However, notifications made to us for instruments traded in the EU will no longer be valid.

Equivalence of EEA regimes

The Treasury has made equivalence decisions in respect of the European Economic Area (EEA) states across a number of financial services areas including the exemption for market making activities under Article 17 of the UK SSR. 

Under this decision:

  • EEA firms that have not previously submitted a notification for a market maker exemption under UK SSR can now do so without needing to be a member of a UK trading venue provided they are a member of an EEA trading venue.
  • To benefit from this exemption, EEA firms should notify the FCA 30 days before they intend to do so. If EEA firms wish to use the exemption from January 2021, they should notify us 30 days before the end of the transition period.
  • EEA firms that joined a UK trading venue and notified the FCA previously do not need to take any further action. 

Find out more about the onshored SSR:

Further information on the changes introduced by the onshored SSR is available in our Primary Market Bulletins (PMB) 21 and 24 published in February and October 2019. PMB 21 is particularly important for firms using the market maker exemption under the onshored SSR.

Page updates

12/11/2020: Editorial amendment Small update to market maker exemption paragraph.
10/11/2020: Information added Equivalence of EEA regimes