The Wealth Management Association, which represents 182 firms, said the rule would have ended the UK's system of share trading for individual investors.
But the EU authorities have now confirmed the deletion of Article 28a from the current text of the Markets in Financial Instruments Regulation.
The article would have required all transactions for individual investors, such as equity and bond trades, to go through a clearing house.
The association said that the result would have been "effective termination of the UK's Retail Service Provider system".
It said this allows cost-effective and safe share trading for around 20 million transactions per year for private clients, trusts and charities.
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Tim May, chief executive of the WMA, said: "This is a victory for our continued use of the RSP and the UK system, ensuring that our model, although different from a large proportion of the EU, is still valued and allowed to flourish – enabling UK shareholders to continue to participate directly in UK plc as they have always done."
The WMA, whose members manage £600 billion of wealth and employ about 32,000 staff, lobbied hard with the support of other trade bodies, HM Treasury and the Financial Conduct Authority.
Mr May said: "The presumption had persisted among Europe's regulators that all financial services could be categorised in the regulatory silos of wholesale and retail.
"Our members require access to the global financial markets (wholesale) in order to serve the needs of their individual clients (retail).
"Therefore this decision by the EU authorities is a welcome recognition of our industry, which manages some £600 billion for more than four million investors across the United Kingdom."