The Swiss government is likely to come to a decision on Friday about an agreement regulating the country’s relations with the European Union. The nail-biter is being closely followed at the Swiss exchange.

Much is at stake when the Bern-based government on Friday will decide about the framework agreement. The European Commission a year ago decided that Switzerland had exactly one more year to sign of on the pact that will act as a guideline for all bilateral agreements and contracts between Switzerland and the EU.

The commission linked the ultimatum to granting equivalence status to the Swiss exchange. If the Swiss government fails to put its stamp of approval to the paper, the EU will bar its bankers from trading on the Swiss exchange.

Extension Agreed

The Swiss foreign minister, Ignazio Cassis, last week got an extension of one week for its decision-making process, according to newspaper «Der Bund» (behind paywall). Cassis met Johannes Hahn, member of the European Commission, last week at the airport in Zurich and together they decided to set December 7 as a final date.

The EU needs about ten days to get a further extension of the equivalence for the Swiss exchange, adding pressure on Bern to act swiftly.

Champagne or Emergency Measures

If the Swiss government fails to decide – the government is made up of four parties representing a wide spectrum from the conservative right to the social democrats on the left – it will have to activate a ready-made emergency plan for its exchange operations. The government would link the right to trade in Swiss stocks to a license granted by Switzerland – a license it would evidently withhold from the EU exchanges if the EU sanctions the Swiss exchange.

Of the 20 largest listed Swiss companies, 14 have no plans to turn their backs to the Swiss exchange, should the government take to these emergency measures, according to a survey by «Der Bund». The other six companies didn’t comment.

The nail-biter is about to come to a close. And for once, the quality of the champagne drunk in trading circles at year-end will hinge strongly on how the government acts.