Since the EU withdrew stock market equivalence, no Swiss shares have been traded in Europe – and vice versa. There is now an exception for the U.K. after the country left the union.

Swiss Finance Minister Ueli Maurer and his British counterpart Rishi Sunak finalized the last details during their video call last week: the U.K. and Switzerland will open up each other's markets for trading in equity securities listed in their respective countries. As of (today) February 3, various trading venues in the U.K. will now receive recognition from the Swiss Financial Market Supervisory Authority (Finma). This was announced by the supervisory authority on Wednesday. Switzerland is thus reacting to a simultaneous measure in the U.K.

This makes the British a European exception from Switzerland's point of view. In haggling over the so-called framework agreement, the EU withdrew the recognition of the Swiss stock exchange SIX as an equivalent trading venue as of July 1, 2019.

Brexit Tips the Scales

The Swiss confederation paid it back in kind: since January 1, 2019, foreign trading venues for trading in Swiss equity securities have required recognition by Finma; a list from the Federal Department of Finance (FDF) is decisive in this regard. The FDF has now updated this list in favor of the U.K. The decisive factor was its exit (Brexit) from the EU at the end of last year.

On Wednesday, stock exchange operator SIX also welcomed the recognition of the respective trading venues in a separate statement.

Trading in Swiss securities in the U.K. is not without its challenges. London's volume of Swiss-listed shares accounted for about 1.3 billion euros per day in 2019. By contrast, the British are now cut off from volume from the EU. That's 4.6 billion euros per day.

London Calling

With the mutual opening, a further mutual approach of the two actually competing financial centers is to be expected. Last week, Maurer and Sunak also discussed how to reduce costs and barriers for British and Swiss financial services providers in each other's countries. The focus is on banks, insurers, the fund business, and the capital market business.