Switzerland’s stock exchange has confirmed that it has approached Germany and other European financial regulators, as it looks at options to replace the UK as its bridge to the European Union.
The Zurich-based SIX Swiss Exchange confirmed to The Financial Times that it had been in talks with Germany’s Federal Financial Supervisory Authority (BaFin) and a number of other national authorities following the UK’s June referendum vote to leave the EU.
Switzerland is not a member of the EU but SIX has relied on its recognition by the UK’s Financial Conduct Authority to achieve the regulatory ‘equivalence’ that enables it to trade across EU markets. “We are approaching the regulators in order to guarantee equivalence for our business,” Stephan Meier, head of SIX’s media relations, told The Financial Times.
Switzerland has no formal bilateral financial services agreement with the EU meaning that it has to ensure that its financial regulations mirror those of the EU to gain access to the market. As a result some financial companies have a presence in EU states, or in the case of SIX, use other stock markets as a bridge into the single market.
Meier said it was hard to say how long the talks would take as there is a great deal of uncertainty surrounding the situation. At the moment, approximately 80% of SIX’s clearing business is from outside Switzerland; one quarter comes via the London Stock Exchange, said Meier. “Post-Brexit equivalence is crucial in the UK and in Europe,” he added.
“We don’t know how the situation will evolve and what kind of agreement the UK will reach with the EU. It’s too early to predict,” he said.
‘London isn’t enough anymore’
There is no certainty as to whether any deal will be concluded but SIX’s chief executive, Urs Rüegsegger, told The Financial Times: “London isn’t enough anymore, you need a country that is in the EU.”
Officials from the City and the UK government are insisting that single market access is possible once the UK leave the EU, however, many financial services firms based in London are still deciding what to do after the Brexit vote.
Last week, as reported, the UK’s Chancellor of the Exchequer Philip Hammond held talks with a collection of the investment world’s largest firms, in a bid to secure London’s status as the world’s foremost financial centre following the Brexit vote.
The UK’s Brexit secretary David Davis said in early September that it was “improbable” Britain could remain in the EU’s single market in goods and services while imposing restrictions on immigration from EU countries. UK Prime Minister Theresa May’s spokeswoman later stressed that Davis was expressing his own opinion, not UK government policy.