Thursday 18 July 2019

Swiss roll on as ban on EU trading fails to dent shares

Shared interest: A man looks at a display showing the current stock prices at an office of Swiss bank UBS in Zurich. Photo: REUTERS
Shared interest: A man looks at a display showing the current stock prices at an office of Swiss bank UBS in Zurich. Photo: REUTERS

Michael Shields, Paul Arnold and Oliver Hirt

Swiss stocks traded without any major glitches on Monday, the first day off their ban from being traded on European Union exchanges, amid an escalating dispute between Switzerland and Brussels.

Many investors see the row as a test for how Brussels will treat the UK as it negotiates its exit from the EU. Switzerland has said market equivalence is a technical matter that should be not used to make a political point.

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Traders, fund managers and investors had prepared before the move, which blocked them from trading Swiss shares, including Nestle and Novartis, on EU exchanges after talks to resolve a dispute between Brussels and Switzerland collapsed last month.

European Union investors can still trade the shares on Swiss exchanges.

In a heated row over a stalled partnership treaty, Switzerland retaliated by forbidding access to its stock markets. EU exchanges would typically see almost a third of the volume in Zurich-listed shares.

Dealers and fund managers said they had not seen a major disruption in trading or immediate impact on prices. A spokesman for the Swiss stock exchange said trading was "unremarkable".

Most major institutional investors have already access to the principle Swiss exchange SIX, so they can move their business, trade over-the-counter or use some investment banks' own internal trading platforms, called "systematic internalisers".

"Brokers and banks are set up to do it. So it's not a massive issue and it doesn't restrict liquidity particularly," said Edmund Shing, global head of equity derivatives strategy at BNP Paribas.

But smaller asset managers without access to exchanges would have to use their brokers to do so, adding to costs and making executing trades more complicated.

Last week, many European stock investors and brokers had rushed to find workarounds before the measures were put in place.

One source at a Swiss bank said trading was going "smoothly". Gilles Guibout, fund manager at AXA Investment Managers in Paris, said his company had made a "few adjustments" but nothing fundamentally different to continue to trade Swiss shares.

Similarly, Banor SIM in Milan, said the company was seeing no impact having always used the SIX Swiss Exchange to trade Swiss shares.

The Swiss Market Index was up 1pc by mid afternoon, in line with gains across Europe.

Reuters

Irish Independent

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