Swiss act to protect Swiss stock exchange

Exterior view of the Swiss Exchange SIX building in Zurich © KEYSTONE / CHRISTIAN BEUTLER

The Swiss government says it wants to ban trading of Swiss shares on European Union stock exchanges from January, in an escalating row with Brussels that could put a severe dent in cross-border stock trading.

Frustrated by a lack of progress on a new bilateral treaty (the framework agreement), Brussels has said that as of December 31 it will withdraw its recognition of Swiss stock market regulations that allows EU-based investors to trade in Switzerland.

+ Putting the institutional framework agreement in context

In a tit-for-tat response, the Federal Council (Swiss government) said in June it would ban by decree trading of Swiss shares on exchanges in the EU by December 1, if the European Commission had not extended Switzerland’s stock market equivalence by then.

The ordinance it unveiled on Friday puts that plan into effect from the beginning of next year, unless there is movement on the equivalency issue.

“The Federal Council’s aim and the best solution for all affected market players in Switzerland and abroad remains a swift and unlimited extension of stock market equivalence,” it said in a statement.External link

In Brussels, the European Commission said: “We will examine and assess the situation, including on the equivalence decision and the countermeasures and discuss possible next steps in view of developments as regards the institutional framework agreement in the coming days and weeks.”

Decision put off

The Swiss government has put off until next week a long-awaited decision on whether to endorse the draft EU framework treaty negotiated for more than four years that has drawn opposition from across the political spectrum, it has been reported.

The Swiss government ordinance announced on Friday requires foreign trading venues to get Swiss recognition for trading Swiss shares. EU trading venues would not qualify, but other venues like New York, Singapore or Hong Kong would.

“The Federal Council continues to stress that this measure serves only to protect the workings of the Swiss stock exchange infrastructure,” the statement said.

Swiss reactions

Swiss Six ExchangeExternal link said it welcomed the government’s move, but in comments to Keystone-SDA, added that the extension of the equivalence was still “the main priority”.

The Swiss Bankers Association also hailed the measureExternal link to protect the Swiss stock exchange infrastructure, “which is of key importance to the Swiss economy. With today’s announcement, the Federal Council is creating clarity and the greatest possible security for markets and market participants in a timely manner”.

For its part, the Swiss Business Federation economiesuisseExternal link said the emergency plan was the “only alternative” if the European Commission did not extend the equivalence which was “against the business interests of both sides”.