Setting a good example

Meanwhile in another part of Europe, time is running out for Swiss equivalence. The one year period previously granted in December 2017 is set to expire on 31st December. Switzerland needs equivalent third-country status in order to preserve the status quo and allow EU trading participants bound by MiFID to continue accessing the Swiss market locally in the EU.

The Swiss government’s Federal Council continues to believe that all the conditions, assessed as recently as last year, are still met for recognition by the EU. They have been holding out for a timely extension, but as yet despite this faith no equivalence of Swiss stock market regulation has been granted nor promised.

As a result last week, the Swiss government’s Federal Council stepped up efforts to protect their stock exchange infrastructure, introducing a new recognition obligation for foreign trading venues. This contingency measure, which will apply from 1 January 2019, effectively gives Switzerland the tools to counter the EU. The new rules require foreign firms to have authorisation to trade Swiss shares. Without such authorisation Swiss shares could have to be removed from trading in EU venues and thus no longer in scope of the MiFIR trading obligation, allowing EU trading firms to trade Swiss shares directly in Switzerland.

How the EU responds could set some precedent for other regulatory regimes close to their border soon to be seeking equivalence.