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SIX bourse sees big risks without EU-Switzerland deal this year

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By Reuters

By Francesco Guarascio

BRUSSELS (Reuters) – Swiss bourse operator SIX risks losing much of its exchange business if the European Union and Switzerland fail to reach a deal by the end of the year on future relations, SIX’s chairman told Reuters on Tuesday.

Switzerland has a patchwork of accords with the EU which govern ties with its most important trading partner, but Brussels is seeking a more comprehensive deal that would bring the Alpine country closer to the bloc.

Under current agreements, Swiss trading venues can attract investors from the EU for their listed companies.

But the European Commission has linked the extension of this financial settlement to an overall review by the end of the year of the relations between the two partners – a move that faces political hurdles in Switzerland.

SIX’s Romeo Lacher said he was still confident a deal could be reached before December because both partners stood to lose from a divorce.

But he acknowledged that SIX was preparing for negative consequences in the long run of a failure in the talks.

“One option is that in the worst case scenario our stock exchange will lose completely importance. Most probably only local mid and small caps will remain. But potentially large caps will list somewhere else,” Lacher told Reuters in Brussels.

He warned that the possible loss of large listed companies would not necessarily benefit the EU, as many of them could consider relocating to London or outside Europe altogether.

He said in that case, SIX Group could act to protect its other business units. The company also runs Swiss franc clearing and post-trade services alongside its stock exchange.

“We start now assessing … what we could protect as the rest of the business without the stock exchange,” he said, adding that SIX could in the long run open subsidiaries in the EU to continue these activities from its Swiss base.

He explained this option would not be feasible for the stock exchange business because of contingency plans drawn up by the Swiss government, which would ban trading of Swiss shares on EU bourses in case of no deal.

“That door is fully closed now,” he said, stressing that this ban was also preventing SIX from seeking any acquisition of EU exchanges. The company flagged expansion plans in Iberia and central Europe earlier this year.

Lacher ruled out the possibility of privately-owned SIX being taken over by other companies.

(Reporting by Francesco Guarascio; editing by Andrew Roche)