Unless the EU either extends such temporary equivalence or grants an unlimited equivalence to the Swiss exchanges, EU investment firms will, from 1 January 2019, no longer be permitted to trade on Swiss exchanges any shares which are (i) admitted to trading on a regulated market or other trading venue in the EU and (ii) traded on such EU trading venues in a way that is not ad-hoc, irregular and infrequent. Such prohibition would affect the trading volumes of the SIX Swiss Exchange.
As a counter-measure, the Swiss Federal Council enacted on 30 November 2018 an Ordinance (the Share Trading Venue Recognition Ordinance) which:
The intended effect of these measures is that trading in shares of Swiss issuers which are listed on a Swiss exchange will - with the exception of the pre-existing secondary listings on a foreign stock exchange with the consent of the issuer - no longer occur on an EU trading venue after 1 January 2019. The share trading obligation of Art. 23 MiFIR would therefore no longer apply to EU investment firms and they could continue to trade the shares of the Swiss issuers on the Swiss trading venues without breaching EU laws.
The FINMA share trading authorisation requirement will apply from 1 January 2019. FINMA has already published a list of foreign trading venues that are recognised for these purposes. To the extent that a non-EU trading venue is not included on such list, FINMA should be contacted prior to 1 January 2019 with a request for inclusion on such list. Note that such process is separate from the FINMA recognition of the foreign trading venue for the purposes of onboarding Swiss participants.
If the EU were to extend the temporary equivalence or grant equivalence for the purposes of Art. 23 MiFIR to the Swiss exchanges, the Swiss authorities would immediately remove the EU from the list of non-eligible jurisdictions. As a result, these measures would not enter into effect.
Where an EU trading venue fails to comply with the Share Trading Venue Recognition Ordinance, the criminal sanctions of the Swiss Financial Market Supervision Act would apply to the responsible executives of the EU trading venue. Also, it would be conceivable that FINMA would start enforcement actions against a FINMA regulated participant in such EU trading venue.
If you wish to discuss the relevance of these measures for your business, we are available to assist you on this topic.