In a move that marks the end of a seven-year presence as a recognised investment exchange in London for the Swiss group, SIX Swiss Exchange will close SWX Europe and reunify share trading in Zurich by mid-2009 in an effort to streamline operations and cut costs.
As a result of the move, trading in the 32 Swiss blue chip stocks (i.e. the shares included in the Swiss Market Index and Swiss Leader Index), which today is conducted on SWX Europe in London, will be relocated to SIX Swiss Exchange in Zurich.
The company says the move will help it meet its customers needs at a competitive price and solidify its strength in Swiss equities.
SIX Swiss Exchange spokesperson Verner Vogt confirms that the move will mean the reduction of 40 posts in London as it moves technology operations, market control, customer help desk and compliance functions back to Zurich. This will lead to operational savings of CHF15 million a year.
The exchange will continue to operate a representative office in London.
The future for SWX Europe senior management, including CEO Lee Hodgkinson, is still being discussed. "My immediate priority is to focus on our staff and customers, particularly those who need assistance during the transition," said Hodgkinson. "But for customers there will be no technical change, and we also want to keep the same post-trade model."
In October the group had a 90% market share in Swiss blue chips, and conducted 4 million trades with a value of CHF150 billion.
One group that will benefit from the reunification is the issuers whose securities are admitted to trading in the EU-regulated segment of SWX Europe. They will no longer have to take into account the rules and regulations of Great Britain and the EU as well as those stipulated under Swiss law.
The company says that the ongoing project aimed at modernising the entire trading system will proceed according to plan, and the operation of SWX Swiss Block, the dark pool it launched over the summer, will also be unnafected.
SWX Europe was the new name given to the group's virt-x subsidiary this year after the SWX Group's merger with SIS Group and Telekurs Group into Swiss Financial Market Services AG on 1 January 2008.
Virt-x itself was launched in June 2001, after pan-European alternative trading system Tradepoint merged with SWX Swiss Exchange in 2000. Tradepoint was renamed virt-x and SWX transferred its blue-chip trading activities to the new exchange, which used the EBS System that was developed by SWX.
In a situation remeniscent of today's developments in European execution venues, Tradepoint was initially launched by a consortium of investment banks as an alternative to trading on the London Stock Exchange. Instinet also became involved as a backer when Tradepoint was struggling in 1999.
Virt-x initially planned to support trading in 613 European blue chip equities, but the timing of launch, which coincided with a US recession and the burst of the dotcom bubble hindered its ambition. In 2003 it re-focussed on its core Swiss blue-chip offering.