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The United Kingdom is to lift the ban on trading in Swiss shares after its exit from European Union.
The treasury plans to enact legislation in the next few days, which will take effect three weeks later if approved, according to a spokesman. The story was the first reported by the Financial Times.
“Once in force, the Swiss State Secretariat for International Financial Affairs has indicated that they will respond by removing restrictions on UK trading venues,” the spokesman said.
The move was expected. In September, the UK confirmed that it would introduce legislation as soon as its equivalence powers come into force. Exchange operator Cboe Europe has stated that it intends to reintroduce Swiss-listed securities to the UK with the implementation of British and Swiss mutual recognition.
The United Kingdom allowing the trading of Swiss shares will not do much to overcome the exodus of EU shares after Brexit. London’s top three European stock markets saw almost all of this business in the EU on the first day of trading after the UK completed its exit from the bloc on 31 December.
Read more: Brexit pushes most equity transactions in Europe to major UK locations
Aquis Exchange Plc chief executive Alasdair Haynes told Bloomberg TV on January 4 that 99.6% of its European transactions had been moved to its parallel headquarters in Paris. Cboe Europe saw 90% move to its Amsterdam headquarters, while 92% of such transactions on the turquoise London Stock Exchange Group Plc platforms were inside the block until 3pm in London on January 4, the first day trading after Brexit. The movements represent approximately 4.6 billion euros ($ 5.6 billion) in transactions, according to data from Cboe Global Markets Inc.
Brexit deficit
More than $ 5 billion in European shares left London for EU headquarters on January 4th
Source: Cboe Global Markets
A the political turn led to The Swiss stock market lost EU recognition in 2019, a move the UK had to follow while still a member of the bloc. Brexit has now freed him from these constraints.
London’s dominance as an investment management center is also uncertain. The European Commission is examining whether it should tighten rules on how EU funds delegate the management of non-bloc investor portfolios. Although delegation is unlikely to be banned, Brussels could make the management of funds from third countries, such as the United Kingdom, more expensive by increasing compliance and governance obligations.
The United Kingdom and the EU have agreed to draw up a memorandum of understanding on regulating financial markets by March, an agreement that will complement the broader Christmas Eve trade agreement but will not be as legally binding. An agreement would further contribute to the establishment of a framework for granting equivalent access to the markets of others, with foreseeable rules and appropriate consultations on any decision to withdraw access.
– With the assistance of Tom Metcalf
(Updates with FT previously reporting the story in the second paragraph.)