As the 30 June 2019 expiry date for Swiss-EU stock market equivalence approaches, the National Council, Switzerland’s parliament, has given a clear mandate to extend negotiations over the nation’s relationship with the EU.
The negotiations, which began in 2014, are centred on the Framework Agreement, an arrangement designed to replace the patchwork of deals Switzerland has with the EU, deals that include free movement of people, mutual recognition of industrial standards, agricultural products, air transport and land transport, along with equivalence for Switzerland’s financial services sector.
Stock market equivalence makes a trade on the Swiss stock exchange equivalent to a trade on an exchange in an EU country. This allows trades to be pooled across countries, something that supports global trade and improves international market liquidity, a win-win for all traders.
However, the EU appears to be losing patience with Switzerland and has suggested it won’t extend Swiss stock exchange equivalence beyond the end of June.
European Commissioner Jean-Claude Juncker has said he will only consider clarifications and is not open to extensive re-negotiation.
Switzerland’s government says that it is constrained by the will of voters and will not sign a deal that has little chance of being accepted by Swiss voters in a likely referendum on the subject.
Federal Councillor, Ignazio Cassis told RTS that “We cannot simply decide at cabinet level that it’s like that and not otherwise”.
SIX, Switzerland’s stock exchange is ready to trigger a plan to minimise disruption on 1 July 2019 in the likely event of a loss of stock market equivalence. It said that it plans to ensure that EU market participants continue to have access to the Swiss domestic market and continue to be able to trade Swiss shares there. SIX has prepared for this eventuality by establishing direct links to all its clients over the past seven months so that trading will not be disrupted. In addition, it has implemented a Fast Track process for bringing new participants on board.