If the recognition of equivalence is definitely not extended, the ordinance of the Swiss Federal Council will be activated on 1 July 2019, meaning that EU trading venues will no longer be permitted to trade in Swiss equities with effect from 1 July 2019. The Federal Council’s measures create a new “recognition regime” for foreign trading venues trading Swiss equities. Due to the new “recognition regime”, FINMA would only grant recognition if the country in which the foreign trading venue is located allows securities firms registered in that country to conduct unrestricted trading in Swiss equities in Switzerland. If this condition is not met, FINMA would not recognize the foreign trading venue, so any such trading venues would no longer be permitted to trade in Swiss equities with effect from 1 July 2019. In case of Switzerland’s expired equivalence status with the EU, this would affect all EU trading venues.
The ordinance is going to be activated with effect from 1 July 2019, as the European Commission will most probably no longer recognize the Swiss legal framework as equivalent although Swiss legal framework has already been judged to be equivalent numerous times by the EU technical authorities in the past.
SIX welcomes the ordinance adopted by the Swiss Federal Council in November 2018 to safeguard and to strengthen the functioning of the Swiss capital market, as this ensures that EU market participants continue to have access to the Swiss domestic market and continue to be able to trade Swiss shares directly at SIX.
The intended consequence of the Federal Council’s ordinance is that EU securities firms should continue to have access to the Swiss domestic market and continue to be able to trade Swiss shares in their home market, because the shares are no longer subject to the EU trading mandate (Share Trading Obligation) in MIFIR (Art. 23).
Further information on the decision of the Federal Council:
Please do not hesitate to contact Jürg Schneider.