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The EU cited the lack of progress on a new umbrella treaty governing relations between Switzerland and the bloc to replace a smorgasbord of individual arrangements.
Mired in a standoff with London over the U.K.’s exit from the bloc, EU officials are making an example of Switzerland for fear of jeopardizing their position with British politicians, many of whom want to renegotiate Prime Minister Theresa May’s Brexit agreement.
“The EU-Switzerland story is colored by the Brexit situation,” said Nicolas Veron, a senior fellow at the research institute Bruegel in Brussels. “I can understand why Switzerland feels it’s taking a stray bullet.”
Brussels declined Bern’s request to reopen talks on contentious points in the bilateral treaty designed to streamline relations. For their part, the Swiss -- preparing for parliamentary elections in October -- refused to back an accord that remains deeply unpopular at home.
Sticking Points
While the Swiss have said ironing out issues including wage protection, state subsidies and immigration is a condition for their signing on, the EU used Switzerland’s stock market as a bargaining chip.
As matters stand, Friday is the last trading day for equities before recognition under EU equivalence rules expires. Without the Swiss countermeasures, EU investors would have lost access to the country’s stock exchanges.
Punching Above Its Weight
London-based trading venues run by London Stock Exchange Group Plc, UBS Group AG, Aquis Exchange Plc and Cboe Global Markets Inc. have warned clients they will have to exclude securities from Swiss issuers. About one-third of trading in such shares currently takes place within the EU, and the rest in Switzerland. The majority of the activity in Swiss shares on SIX, Switzerland’s main stock exchange, is generated by traders in the EU. [...]