BRUSSELS (Reuters) – Swiss bourses face losing direct access to EU investors from July 1, as the European Commission reported on Tuesday that talks with Bern over a new partnership treaty had failed to progress.
The loss of access granted under a so-called “equivalence” regime would have broad financial repercussions for Switzerland, and for the 28-country European Union itself.
But the radical step is seen in Brussels as inevitable after years of inconclusive negotiations over new arrangements on future relations with Bern.
The hardening of Brussels’ stance is also partly linked to parallel talks underway with Britain over its departure from the EU. A lenient approach to the Swiss dispute could encourage London to seek softer Brexit terms, an EU diplomat told Reuters.
Reporting the results of the weekly meeting of the EU executive, Commissioner Maros Sefcovic told a news conference that it had noted a lack of progress in the talks, and saw no need to make a decision on EU-Swiss relations.
“If the European Commission does not decide otherwise, the equivalence decision (on Swiss exchanges) will automatically expire on June 30,” Sefcovic said.
A Swiss government spokesman had no immediate comment.
In a precautionary move, the Swiss government announced plans in November to ban trading of Swiss shares on EU stock exchanges unless the European Commission recognizes Swiss regulatory equivalence.
Brussels has used the deadline on the Swiss bourses’ preferential status as leverage to convince Bern to endorse a broad partnership treaty that was agreed by the two sides in November after years of negotiations.
In December it temporarily extended the equivalence regime by six months until the end of June, after talks with Bern failed to reach a compromise.
But the Swiss asked for more clarifications last week on several issues, including wages and citizens’ rights.
The diplomat told Reuters that the Commission had effectively decided at Tuesday’s meeting not to extend the equivalence for Swiss exchanges, but will formally announce the decision only on Friday after an EU leaders’ summit in Brussels.
The Swiss could still make a last-minute offer before the summit to avoid the punitive measures on its bourses, which rely on EU clients, he said. However, this is seen as highly improbable.
“There will be no miracle,” the diplomat said.
In spite of the likely sanctions on Swiss exchanges, Brussels continues to support the ratification of a new treaty governing relations between Switzerland and the EU bloc.
“Our doors remain open to conclude the agreement before the end of this commission’s mandate,” Sefcovic said, underlining however that the draft treaty already agreed with Bern could not be changed. The mandate ends on October 31.
Swiss-EU relations suffered in 1992 when Swiss voters rejected joining the European Economic Area. This led to a negotiated patchwork of 120 accords that now govern ties. The treaty in question would sit atop those accords.