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What is the impact of the EU-Switzerland standoff on Swiss equity markets?

What is the impact of the EU-Switzerland standoff on Swiss equity markets?
Asked by
Peter Kimani categorie-icon time-icon4 months ago
1 Answer Answer Question

Lillian McKenna
Answered time-icon4 months ago

The current stand-off between the European Union and the Swiss Government regarding the overarching partnership treaty that is set to govern relations between the two bodies is likely to lead to a massive liquidity crunch in Swiss equity markets.

The EU has said that it will not renew the equivalence programme that allows Swiss stocks to be treated much the same way as European stocks given that it is expiring on 1st July, which means that EU traders will not have access to Swiss stocks from that date.

The Swiss Government has not taken this threat lightly and has passed a law requiring foreign exchanges to register with Swiss regulators before offering Swiss shares to their clients, which effectively locks out European exchanges.

Given that European exchanges account for over half of the overall trading volume on Swiss stocks, there is bound to be a significant drop in the liquidity levels associated with Swiss shares as from 1st July.

Many analysts believe that neither side will change its position before the deadline, which means that a last-minute treaty is highly unlikely.

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