Switzerland and UK normalise stock exchange relations

The Brexit process was completed at the end of 2020, paving the way for the normalisation of relations between Switzerland and the UK in the area of stock exchanges. The UK government recognised the equivalence of Swiss exchange regulation in mid-January, and submitted regulations to this effect to parliament. Following the expiry of a three-week period allowed for objections, this decision has now become law.

In return, the Swiss authorities responsible have deactivated the measure to protect Swiss stock exchange infrastructure in respect of UK trading venues. Specifically, the Federal Department of Finance has removed the UK from the list of jurisdictions that restrict their market participants in trading Swiss shares on trading venues in Switzerland. This in turn allows FINMA to permit trading of Swiss shares on UK exchanges once again. FINMA recognises foreign trading venues for trading in Swiss shares in accordance with the relevant legal provisions.

A pragmatic step for open and efficient capital markets

Financial service providers rely fundamentally on open and efficient capital markets. The SBA therefore expressly welcomes the normalisation of stock exchange relations between Switzerland and the UK as part and parcel of efforts to open up and enhance cooperation in financial services between the two nations. The Swiss and UK finance ministers signed a joint statement to this end on 30 June 2020, and followed it up on 27 January 2021 by confirming their resolve to move ahead rapidly with negotiations on a corresponding agreement.

What happens to the measure to protect the Swiss stock exchange infrastructure?

The protective measure remains in force without change in respect of the EU for as long as the EU withholds recognition of Swiss exchange equivalence. For Swiss banks, the reinstatement of equivalence recognition by the EU remains the central objective. The EU authority concerned has already confirmed the technical equivalence of Swiss exchange regulation. Official recognition of equivalence by the European Commission at the political level would therefore be a welcome development for all market participants, both in Switzerland and in the EU.