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The United Kingdom must reverse the ban on trading Swiss shares after its exit from the European Union.
The Treasury plans to introduce legislation to lawmakers in the coming days, which will take effect three weeks later, if approved, according to a spokesman. The story was first reported by the Financial Times.
“Once in place, the Swiss Secretary of State for International Financial Affairs has indicated that it will pay back by removing restrictions on UK trading venues,” said the spokesman.
The change was already expected. In September, the United Kingdom confirmed that it would introduce legislation as soon as its equivalence powers came into effect. Stock exchange operator Cboe Europe said it is planning to reintroduce Swiss listed securities in the UK as soon as British and Swiss mutual recognition is implemented.
The fact that the UK allows for Swiss stock trading will do little to overcome the exodus of EU shares after Brexit. The top three London locations dealing with European equities saw almost all of this business movement for the EU on the first day of trading, after the UK completed its exit from the bloc on 31 December.
Read more: Brexit pushes most European stock trading out of key UK locations
Alasdair Haynes, CEO of Aquis Exchange Plc, told Bloomberg TV on January 4 that 99.6% of European stock trading was moved to its parallel location in Paris. Cboe Europe saw 90% move to its headquarters in Amsterdam, while 92% of such trades on the London Stock Exchange Group Plc’s Turquoise platforms were inside the block at around 3pm in London on January 4, the first trading day after Brexit. The movements represent about 4.6 billion euros (US $ 5.6 billion) in business, according to data from Cboe Global Markets Inc.
Brexit Deficit
More than $ 5 billion in European shares left London for EU events on Jan. 4
Source: Cboe Global Markets
AN political dispute led to The Swiss Stock Exchange lost recognition to the EU in 2019, a move the UK had to comply with while still a member of the bloc. Brexit has now freed you from these restrictions.
London’s dominance as an investment management center is also uncertain. The European Commission is considering 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 can make it more expensive to administer funds from third countries, such as the United Kingdom, by increasing compliance and governance obligations.
Britain and the EU agreed to draft a memorandum of understanding on financial market regulation by March, an agreement that will complement the broader Christmas Eve trade agreement, but which will not be legally binding. An agreement would also help to establish a structure to grant equivalent access to each other’s markets, with predictable rules and adequate consultation on any decision to withdraw access.
– With the help of Tom Metcalf
(Updates with the FT previously reporting the story in the second paragraph.)