EU-Swiss stock market dispute reaches new impasse 

Swiss stocks will be barred from trading in the European Union from Monday after the two sides failed to reach a political framework deal. 

The outside of the stock exchange building in Zurich © Keystone / Ennio Leanza

The Swiss government said Thursday it would block trading of Swiss shares in the EU, an unprecedented retaliatory step, shortly after the European Commission announced that it saw no reason to extend recognition of Switzerland’s stock exchange – Europe’s fourth largest – beyond the end of this month. The Brussels measure effectively bans EU-based banks and brokers from trading shares directly on Swiss bourses. 

“The Swiss Federal Finance Department is…activating the measure to protect the Swiss stock exchange infrastructure,” a Swiss statement saidExternal link. “This activation is because the European Commission has not yet extended the stock market equivalence.” 

Temporary solution? 

Swiss Foreign Minister Ignazio Cassis told Swiss public radio SRFExternal link that he hoped the measures could be temporary and pointed to “misunderstandings” with the EU. He said that the EU felt that Switzerland was playing for time, but this was not the case. 

“…we need time because we have a different political structure and we cannot simply decide in the government and that’s it,” he said. 

Cassis was referring to the Swiss system of consensus-building between politicians, unions, industry bodies and others and its system of direct democracy in which voters get a final say on important matters. 

In reaction, the Swiss stock exchange, SIX, reiterated its statementExternal link of Monday, saying it still welcomed the ordinance adopted by the Swiss Federal Council in November 2018 to safeguard and to strengthen the functioning of the Swiss capital market. “If the recognition of equivalence is definitely not extended, this measure shall ensure that EU market participants continue to have access to the Swiss domestic market and continue to be able to trade Swiss shares there.” It added that it had prepared itself with several measures for this eventuality.

The deal 

Since 2014, Bern and Brussels have been trying to formalise long-term ties in an institutional framework agreement. Relations are presently covered by around 120 separate bilateral accords negotiated since a 1992 referendum in the Alpine state rejected joining the European Economic Area.   

The proposed overarching agreement covers five of the larger bilateral deals: free movement of people, mutual recognition of industrial standards, agricultural products, air transport, and land transport.   

+ What is the EU framework agreement? 

Experts say failure to endorse the treaty and begin the ratification process could severely shake Swiss ties with its biggest trading partner. 

But with Swiss parliamentary elections due in October, the deal has become entangled in domestic politics, with opposition from both the left and right. 

Earlier this month Switzerland said it wanted “more clarification” on the deal before signing it, but the EU has already indicated that it is not keen on more haggling over the details.