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The UK intends to reverse a ban on trading in Swiss shares after its withdrawal from the United States European Union.
The treasury plans to introduce legislation in the coming days to legislators which, according to a spokesperson, will come into force three weeks later if it is approved. The story was first reported by the Financial Times.
“Once in force, the Swiss State Secretariat for International Financial Affairs has indicated that they will compensate by lifting restrictions on UK trading venues,” the spokesman said.
The move is expected. In September, the United Kingdom confirmed that it would introduce the legislation as soon as its equivalence powers came into force. Exchange operator Cboe Europe has said it intends to reinstate securities in the UK once the British and Swiss mutual recognition is implemented.
The UK allowing Swiss equities to trade will do little to overcome the post-Brexit exit of EU equities. The three largest venues in London that handle European equities moved almost all of these matters to the EU on the first trading day after the UK completed its exit from the bloc on 31 December.
Read more: Brexit pushes most European stock trading off top UK sites
Aquis Exchange Plc CEO Alasdair Haynes told Bloomberg TV on January 4 that 99.6% of its European stock trading had moved to its parallel location in Paris. Cboe Europe moved 90% to its Amsterdam location, while 92% of such transactions were on the London Stock Exchange Group Plc’s turquoise platforms in London on 3 January at 15:00, the first day of trading after Brexit. The moves represent about 4.6 billion euros ($ 5.6 billion), according to data from Cboe Global Markets Inc.
Brexit Deficit
More than $ 5 billion in European shares left London for EU sites on January 4
Source: Cboe Global Markets
A political row led to the The Swiss stock exchange lost EU recognition in 2019, a move the UK had to comply with while still a member of the bloc. Brexit has now freed it from these restrictions.
London’s dominance as a hub for investment management is also uncertain. The European Commission is investigating whether to tighten the rules on how EU-based funds delegate portfolio management to investors outside the bloc. Although delegation is unlikely to be banned, Brussels could make it more expensive to manage funds from third-party countries such as the UK by increasing compliance and governance obligations.
Britain and the EU have agreed to draw up a memorandum of understanding on the regulation of financial markets by March, an agreement that will complement the broader trade agreement on Christmas Eve, but which will not be as legally binding. An agreement will still help to establish a framework for granting equivalent access to each other’s markets, with predictable rules and proper consultation on any decision to withdraw access.
– With help by Tom Metcalf
(Updates with FT previously reported in the second paragraph.)