Early data in Swiss share trading on Monday indicated banks and fund managers in the EU were directing their deals towards three destinations - the Zurich exchange, off-exchange and the US – as investors adjusted to the weekend ban that prevented them trading shares in the EU.
Traders said there was no noticeable increase in volumes in Zurich as the halt came into effect. The SMI index was trading 0.8 per cent higher at 9,976, rising in line with other European indices.
The restriction was imposed following the breakdown of talks between Brussels and Bern.
Amid stalling negotiations over a trading agreement, Brussels let the “equivalence” status granted to Switzerland and its stock exchange expire. Switzerland retaliated with its own ban on trading Swiss equities on exchanges in the EU.
The equivalence permit lets Swiss and EU investors freely trade across each others’ borders and Zurich is the fourth-largest for trading shares in Europe, according to data from CBOE Europe. Investors face the threat of imprisonment in Switzerland if they flout a ban. Swiss shares can only be traded on the Zurich exchange, via a recognised broker.
More than 90 per cent of trading in Novartis and Swiss Life was being traded on the Swiss exchange, according to data from Refinitiv. However only around 70 per cent of trading in UBS was in Zurich, with more than 10 per cent collectively traded on US markets, including the New York Stock Exchange, CBOE Global Markets and IEX. A further 14 per cent in UBS traded off-exchange, which is out of scope of the ban.
Around 15 per cent of deals in Credit Suisse were being traded off-exchange. Just under 60 per cent of shares in ABB, the electrical equipment manufacturer was trading in Zurich, according to Refinitiv, with the rest largely directed to US markets. Nearly 30 per cent of shares in Alcon, the medical equipment maker, was being traded on the NYSE.
Some traders predicted others would hold back from trading until the dust settled while some other funds were still sorting out new trading relationships. London-based trading vendues CBOE Europe, Turquoise and Aquis Exchange, which collectively trade around a quarter of daily Swiss share trading, turned off access for EU traders over the weekend. – Copyright The Financial Times Limited 2019
