EU hands Switzerland six months to agree to new deal on bilateral relations

The European Union said on Monday Switzerland's stock exchange should be granted access to the single market until the middle of the next year – effectively giving Bern six months to agree to a new deal on bilateral relations with Brussels.
It’s a move that should come as a relief to the Swiss government as it tries to build consensus around a new draft deal on the future of bilateral relations between Bern and Brussels – a document that is key in ensuring it continues to enjoy access to the all-important EU market.

The EU had previously threatened to pull the rug out from the Swiss stock exchange by removing its so-called equivalence which means EU-based trading platforms would not be able to buy and sell Swiss stocks.

That equivalence was granted temporarily for 12 months at the end of 2017 and there were fears it would not be renewed this month as Brussels tried to pile pressure on Switzerland to back a draft deal which has been four years in the making.

But Switzerland didn’t blink. Instead, the Swiss Federal Council – the country's executive – sought to buy more time. First, it rolled out measures aimed to protect the stock exchange. Then, in early December, it published details of its draft deal with Brussels announcing that while it considered “the current outcome of the negotiations to be largely in Switzerland's interests”, it would launch a public consultation looking at the draft deal.

That consultation is expected to last until the spring.

Now Brussels has stood back from the brink with the announcement of a planned extension of equivalence for the Swiss stock market.

"[This] should provide time to Switzerland to finalise its internal consultation on the Institutional Framework Agreement," said Valdis Dombrovskis of the European Commission's Financial Stability, Financial Services and Capital Markets Union directorate in a European Commission statement.

"It will also ensure continuity for portfolio managers and brokers active in Swiss equities. We want that European firms can continue trading in Swiss equities both in the EU and on the Swiss exchanges,” he added.

Door 'shut' on further negotiations

Meanwhile, in a press conference on Monday looking at the current state of play in Swiss–EU negotiations, European Commissioner Johannes Hahn warned Brussels wouldn’t be coming back to the negotiating table.

“For us, the negotiations are finished: the door is closed,” he said.

“The ball is now in Bern’s court."

Hahn went on to note there can be "no such thing as an à la carte framework agreement" between Brussels and Bern.

“The basic principle [for a framework agreement] is nothing is agreed until everything is agreed," he said.

The Swiss government now find itself in a difficult position as it attempts to build support for a deal which is facing widespread opposition over what many see as an attack on Swiss measures designed to protect the high wages of workers in the country.

But for the operators of the SIX Swiss Exchange, which finds itself in the unwelcome position of being the chief bargaining chip in talks between Switzerland and the EU, the focus instead is on ensuring permanent equivalence for the country's stock market is guaranteed.