Why the Swiss Spat With EU Is Spilling Into Stock Markets
The national emblem of Switzerland on a Swiss one franc coin.
Photographer: Valentin Flauraud/Bloomberg
A political rupture between Switzerland and the European Union led to a regulatory breakdown that forced EU-based traders to change where they buy and sell shares of Swiss companies. While it’s not yet clear how the standoff will play out in the long term, the markets adapted smoothly to Switzerland’s decision to adopt unprecedented contingency plans that redirected trading in some of the world’s most widely held stocks.
Though Switzerland isn’t part of the EU, about a third of trading in Swiss-based companies took place on exchanges and trading platforms within the bloc before the nation’s stock-market lost EU recognition. Switzerland is home to Nestle SA, Novartis AG and Roche Holding AG, the three most-heavily weighted companies in the benchmark Stoxx Europe 600 Index. The expiry of the SIX Swiss Exchange’s so-called equivalence status -- the regulatory framework that allowed EU traders to trade on stock exchanges in Switzerland -- became a bargaining chip in a broader political flight. It officially expired on June 30.