Swiss to ban EU exchanges in row that could have implications for City post-Brexit
The Swiss government said today it was ready to ban stock exchanges in the European Union from trading Swiss shares, in a row that could have repercussions for the City post-Brexit.
The move follows the EU refusing to extend stock market equivalence for Switzerland after Brussels grew frustrated with a lack of movement on an EU-Swiss accord.
Stock market equivalence is the recognition that Switzerland’s regulations are as tough as the EU’s own.
The EU’s equivalence agreement with Switzerland is set to expire on 30 June. The EU has signalled it is not willing to extend the deadline.
In retaliation the Swiss government today said it would withdraw recognition from trading venues in the EU from 1 July to “protect the Swiss stock exchange infrastructure in the event of non-extension”.
“Trading venues in the EU would thus be prohibited from offering or facilitating trading in certain shares of Swiss companies from that date,” the Swiss government said in a statement.
The row has implications for the UK’s financial sector as it highlights the danger of relying on equivalence for access to the EU’s financial markets as the recognition can be withdrawn unilaterally.
The risk of being locked out of the EU market has pushed many UK-based financial institutions to open EU branches in order to keep trading throughout the bloc after Brexit.
The EU’s hard line with Switzerland is also linked to Brexit as a lenient approach to the Swiss could encourage London to seek softer terms, an EU diplomat told Reuters.
Six, the operator of the Swiss exchange, said it welcomed the Swiss government’s decision to enact protective measures as it meant EU participants could still access the Swiss domestic market and could trade Swiss shares directly at Six.
Pan-European stock trading platform Aquis Exchange said; “If equivalence is not extended, and if the Swiss Federal Department of Finance (FDF) rescinds recognition of EU trading venues for the trading of Swiss securities, then Aquis Exchange will take the necessary steps to comply with the directive.”
The relations between the EU and Switzerland are governed by more than 120 bilateral agreements.
They are set to be replaced with a political treaty, however the Swiss government earlier this month asked for further clarifications before it would sign off on the draft agreement.