The equivalence dispute with the European Union

The lapse of equivalence in 2019

The most serious political challenge to the Swiss exchange in recent decades came from Brussels. Under the Markets in Financial Instruments Regulation (MiFIR), which applied from January 2018, investment firms in the European Union were obliged to trade shares admitted to trading on an EU trading venue only on EU trading venues or on third-country venues recognised as equivalent. Since many Swiss shares were also traded on European venues, this share trading obligation meant that European banks and brokers could continue to trade Swiss shares on SIX Swiss Exchange only if the EU recognised Swiss exchange regulation as equivalent.

In December 2017 the European Commission granted this equivalence, but only for one year, and later extended it until 30 June 2019. The decision was widely understood as a lever in the negotiations on an institutional framework agreement between Switzerland and the EU, since the Swiss regulation of exchanges met the substantive criteria of equivalence without difficulty.¹ When the negotiations on the framework agreement stalled, the Commission allowed equivalence to lapse on 30 June 2019.

The Swiss protective measure

The Federal Council had prepared for this outcome. On 30 November 2018 it adopted an ordinance under which foreign trading venues required recognition by FINMA if they wished to admit Swiss shares to trading, and recognition was to be denied to venues in jurisdictions that restricted the trading of Swiss shares on Swiss venues. When equivalence lapsed, the Federal Department of Finance activated the measure on 1 July 2019. The practical effect was to reverse the European share trading obligation. Since EU venues could no longer offer trading in Swiss shares, EU investment firms could fulfil their obligation only by trading those shares on SIX. For Swiss shares the European restriction was therefore ineffective.

The outcome surprised many observers. In the weeks after 1 July 2019, the trading volume of the Swiss blue chips remained within the range of previous months and moved in line with the trends observed on the Euronext exchanges in Amsterdam and Paris. An analysis published by the Brussels think tank Bruegel concluded in July 2019 that the loss of equivalence had left Swiss equities and the Swiss exchange neither better nor worse off for the time being.² In fact, liquidity in Swiss shares was concentrated even more strongly on SIX, since trading that had previously taken place on European multilateral trading facilities now had to return to Zurich. Economists at the University of St. Gallen pointed out that this concentration created a kind of European monopoly for SIX in Swiss shares, which might in the long run harm liquidity and competition.³

Statutory anchoring and the end of the dispute

The protective measure was initially based on an ordinance limited in time. In March 2023 Parliament approved its incorporation into the FinfraG, with the statutory provisions entering into force on 1 January 2024. In 2024 the EU amended MiFIR so that the share trading obligation would apply only to shares with an ISIN of the European Economic Area, which removed the basis of the conflict. On 29 January 2025 the Federal Council decided to remove the EU and its member states from the list of jurisdictions whose venues could not be recognised, with effect from 1 May 2025.⁴ Since then, Swiss issuers may again have their shares admitted to trading on EU exchanges, subject to recognition of those venues by FINMA.

The dispute left several lessons for the Zurich financial centre. It showed that access to the European market could be used as a political instrument in negotiations that had nothing to do with financial regulation. It also showed that Switzerland could protect its core market infrastructure through a well-prepared unilateral measure, provided that the liquidity of the domestic market was deep enough to attract foreign traders. Few other third countries could have responded as effectively, since few have an exchange on which the shares of several of the largest European companies are primarily listed. The episode strengthened the conviction in Zurich that the home market of SIX, anchored by Nestlé, Novartis, Roche and the other large Swiss companies, is its most valuable asset.

Notes

1. SIF, “Measure to protect Swiss stock exchange infrastructure”, https://www.sif.admin.ch/en/protect-swiss-stock-exchange-infrastructure. The page describes the limited equivalence granted in December 2017, its extension until 30 June 2019, the protective ordinance of 30 November 2018, its activation on 1 July 2019, its statutory anchoring and the removal of the EU from the list with effect from 1 May 2025. ↩
2. Michael Baltensperger, “The consequences of Switzerland’s lost equivalence status”, Bruegel, 25 July 2019, https://www.bruegel.org/blog-post/consequences-switzerlands-lost-equivalence-status. ↩
3. swissinfo.ch, “Has the EU scored an own goal with Swiss stock exchange freeze?”, July 2019, https://www.swissinfo.ch/eng/business/equivalency-test_has-the-eu-scored-an-own-goal-with-swiss-stock-exchange-freeze-/45077934. The article quotes Reto Föllmi and Angelo Ranaldo of the University of St. Gallen. ↩
4. Urs Kägi and Florian Schweighofer (Bär & Karrer), “Lift of Swiss Protective Measures Against EU Trading Venues”, CapLaw 2025, https://caplaw.ch/2025/lift-of-swiss-protective-measures-against-eu-trading-venues/. The authors attribute the decision to the MiFIR amendments of 2024 and mention requests from parliamentary committees and negative effects for Swiss companies. The removal concerned the list under Art. 41c para. 2 FinfraG. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of September 2025.