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Swiss Exchange confident of post-Brexit access to EU stock market

By Huw Jones | LONDON

LONDON The SIX Swiss Exchange said on Wednesday it was confident it can continue serving investors in the European Union without having to set up a new exchange after Britain exits the EU.

Switzerland is not part of the EU and currently serves customers in the bloc from a base in London. With Britain leaving the EU, it has to find another way of linking up with its continental European customers.

Chris Landis, chief executive of the SIX Swiss Exchange, said he was in talks with EU officials about serving customers under a system known as “equivalence”.

This refers to a non-EU country accessing customers in the bloc by complying with rules similar to those in the EU.

The bloc’s European Securities and Markets Authority (ESMA) will have to give a view on whether Swiss trading rules are similar. The bloc’s executive European Commission would then decide whether equivalence can be granted.

Landis said he was in talks with these two EU bodies.

“The preferred route for us is clearly the equivalence route, but that does not exclude other routes,” Landis told Reuters.

“Technically, we have no reason to believe we should not be deemed equivalent. I am confident.”

An alternative would be to set up an exchange in the EU, but this would be onerous, and could create legal uncertainty for customers as to whose rules apply, he said.

Equivalence would be granted under an EU securities law known as MiFID II, which comes into effect in January 2018.

Switzerland has already put into law rules along the lines of MiFID II, and will need an equivalence decision from the EU by the 2018 start date for the EU law.

Top Swiss shares make up a fifth of the Stoxx50, a widely followed stock index, and trading in the EU would be disrupted if Swiss volumes were suddenly cut off, Landis said.

“European investors would be depending on haphazard price formation. That is not something that is desirable,” Landis said.

This week saw more consolidation in the exchange sector when the CBOE said it was buying Bats for $3.2 billion. This follows the planned merger of the London Stock Exchange Group with Deutsche Boerse.

“I don’t think we want to get into bed with anybody at this point in time, but that does not preclude working together,” Landis said.

The SIS Swiss Exchange group’s settlement arm said last week it would collaborate with Deutsche Boerse’s Clearstream unit.

(Reporting by Huw Jones; Editing by Elaine Hardcastle)

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