The EU tries to strong-arm Switzerland into a new trade deal

SWITZERLAND’S HALF-IN, half-out relationship with the European Union has suited its traders and firms well. Shares of almost all the large Swiss companies that are traded on SIX, Switzerland’s main exchange, are also available within the EU through alternative exchange platforms known as multilateral trading facilities (MTFs). Traders based in the EU account for 60-80% of trading in Swiss shares by volume. Big Swiss firms like Nestlé, Novartis and Roche make up 20% of the market capitalisation of the Stoxx Europe 50 index. It is, to coin a phrase, a single market.

Now that system is at risk. It relies on “stockmarket equivalence”, a status granted by the EU that allows swift and seamless trading across borders. But if Switzerland refuses to sign a new, EU-drafted trade deal, its equivalence may be revoked. The EU has given Switzerland until the end of June to sign, or at least make progress. If the deadline is met, equivalence is likely to be renewed indefinitely.

If it is not, however, traders within the EU, who are supposed whenever possible to trade within it or on exchanges granted equivalence, would be pushed to trade Swiss stocks on European MTFs, rather than on Swiss exchanges. That would make Swiss stocks harder and dearer to trade, because it would segregate interested buyers and sellers. “You want to buy a...



via The Economist: Finance and economics Business Feeds

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