Pandemic prompts delay in new EU share trading rule

LONDON, March 20 (Reuters) - Changes to how shares are traded off an exchange in the European Union have been delayed by three months because of the impact of the coronavirus epidemic on banks, the bloc’s markets watchdog said on Friday.

The European Securities and Markets Authority (ESMA) said enforcing the new “tick” size regime or size of share trades executed at “systemic internalisers”, typically big banks, should be delayed to 26 June.

Tick size refers to the increments a stock can move up or down, and the new regime formally comes into effect on March 26 to avoid off-exchange venues having a competitive advantage over exchanges.

It involves making changes to IT systems.

“ESMA understands that the compliance with the new tick size requirements as of 26 March 2020 could create unintended operational risks for EU market participants in the current market situation in the context of the increasing spread of the COVID-19 pandemic,” ESMA said in a statement.

Banks are shutting their trading floors and using back up sites due to the epidemic.

Earlier on Friday ESMA set out guidance for traders who have to work from home and unable to fully comply with rules such as recording telephone calls with customers about stock and bond trades.

The watchdog has also delayed other regulatory changes to allow financial firms to focus on staying operational in the epidemic.

Reporting by Huw Jones, editing by Louise Heavens