The Swiss Federal Council has adopted an ordinance that introduces a new “recognition regime” for foreign trading venues which trade Swiss shares.
The ordinance has been adopted due to the fact that the EU Commission has not yet decided to extend the equivalence recognition of Swiss legal and supervisory framework for trading venues with that of the EU.
SIX welcomes the contingency measure of the Swiss Federal Council, which it sees as a measure to protect the functioning of the Swiss stock exchange infrastructure, as it ensures that EU market participants continue to have access to the Swiss domestic market and are able to trade Swiss equities.
Based on the new “ recognition regime”, FINMA will only grant recognition if the jurisdiction, in which the foreign trading venue is located, permits investment firms in that jurisdiction to trade in Swiss shares in Switzerland without restriction. If this condition is not met, a foreign trading venue will not be granted recognition by FINMA; consequently, these venues will not be allowed to offer trading in Swiss shares, effective from 1 January 2019.
The intended consequence of the measure is that EU investment firms continue to have access to the Swiss domestic market and are able to trade Swiss equities in their home market, because the shares are no longer subject to the trading mandate (Share Trading Obligation) in MIFIR (Art. 23). However, SIX regrets that it was necessary to implement the measure at all and that to date the decision of the equivalence recognition has not been granted yet by the EU Commission.
Romeo Lacher, Chairman of the Board of Directors, SIX, says: “Switzerland is the home of some of the largest and most actively traded companies in Europe. These securities are listed and traded on SIX which is the deepest, most liquid and most cost effective market for these shares. The international connectivity of the Swiss financial centre is a fundamental prerequisite for these conditions – for both, national and European investors. This is why the achievement of equivalence continues to be our highest priority, such that legal certainty is achieved and transparent and effective open markets can continue to serve the requirements of investors.”
