London Starts to Win Back Swiss Share Trades in Brexit Boost

The return of Swiss share trading to London has begun, with initial signs that the city’s exchanges are hosting between a quarter and a third of the volumes seen before a European Union-wide ban.

Cboe Europe had a 4.4% market share of trading in stocks like Nestle SA and Novartis AG by midday on Thursday, with about 68.9 million euros ($82.3 million) changing hands. This is down from 17% before Switzerland barred trading in a spat with the EU. Aquis Exchange Plc had about 2% market share on the first full day since the U.K. ended an 18-month hiatus for Swiss equities, down from a 6% share.

“We’re encouraged by our market share so far and expect this to grow in the coming days and weeks,” said David Howson, president of Cboe Europe. “We’re excited to be able to bring back competition and choice to this important market.”

Switzerland banned dealing in about 200 stocks on European venues outside its borders in mid-2019 in response to the bloc withdrawing its “equivalence” status for the country’s stock markets. The slow return of Swiss share liquidity to Britain could presage what will occur if the U.K. strikes an equivalence deal with the EU, according to Aquis Chief Executive Officer Alasdair Haynes.

“This is what we anticipated -- it will be slow and gradual to win business back,” said Haynes. “It proves the point that once equivalence is lost it’s an effort to get it back.”

London venues reinstated trading after Swiss authorities gave permission on Wednesday, just over a month since the U.K.’s split from the European Union came into force. Before the ban, London averaged 1.3 billion euros in Swiss share trades per day.

Volumes on so-called dark pools will likely “go back to pre-equivalence levels, even though maybe not from day one,” as routers and liquidity providers need some data and time to adapt their systems, according to Joel Frey, head of equities and derivatives execution at Zuercher Kantonalbank. “Everybody will probably adapt quite rapidly,” he said.

SIX Group, which runs the largest venue for Swiss equities, said it welcomed the move to return Swiss shares to London and supported open capital markets in the interests of investors.

London Stock Exchange Group Plc’s Turquoise venue also resumed Swiss trading Thursday. Robert Barnes, CEO of Turquoise, said that the reintroduction went smoothly and that he expects momentum to build.

“The move marks an important development for London as an international equities trading hub,” he said.

©2021 Bloomberg L.P.

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