Swiss finance minister hopes to solve EU stock exchange impasse

Switzerland still hopes to solve a dispute with the European Union over its stock exchanges, though the matter is linked to progress in as-yet deadlocked political talks. The Swiss have only been granted temporary equivalence under the EU’s MiFID II regime, which means their stock market risks being ruled off limits to EU traders from next year.

Finance minister Ueli Maurer says problem is political, rather than technical, and that Britain’s negotiations with Brussels doesn’t make life easier.

“We still hope that we find a solution by the end of the year, at least for a year’s extension,” he said in an interview. “It’s a political question, the EU has made it contingent on progress on the framework agreement, and it’s still pretty difficult at the moment to evaluate this progress.”

The impasse between Bern and Brussels stems from negotiations over a proposal to streamline relations and replace a series of bilateral agreements on everything from agriculture to civil aviation with an overarching framework agreement. Much like Brexit, key issues include financial sector market access, immigration, and dispute settlement.

“The question is whether we can overcome the current and recognised hurdles, so that there’s an agreement in some form,” he said on the sidelines of the International Monetary Fund and World Bank’s annual meeting. “That still remains to be seen.” Negotiations began in 2014 and at one point were expected to conclude this year. Yet the two sides cannot agree about labour market rules. In Switzerland, both euro- skeptics and labor unions don’t want the government to make concessions on a system protecting high local wages. About a third of trading in Swiss shares currently takes place within the EU and the rest in Switzerland, according to according to Romeo Lacher, chairman of SIX Swiss Exchange AG.

And the majority of the activity in Swiss shares on SIX comes from traders in the EU, giving an idea of what the company has to lose.

If equivalence, which is set to expire in December, doesn’t get extended, the Swiss government has laid out a contingency plan that would prohibit Swiss shares from being traded in the EU, in theory redirecting dealing back to Switzerland.

“I think it’s doable,” Maurer said. “Not a lasting solution but usable and accepted as an emergency solution.”