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ZURICH, Dec 3 (Reuters) - The blue-chip Swiss Market Index rose 1.4 percent in early trading on Monday as trade tensions eased, overshadowing a Swiss treaty row with the European Union that could affect share trading from next year.
The Swiss government announced plans on Friday to ban trading of Swiss shares on EU stock exchanges from January, in an escalating clash with Brussels that could put a severe dent in cross-border stock trading.
“Anything that is going to make it difficult to buy and sell shares in Swiss companies isn’t going to be helpful,” said Jon Cox, head of Swiss equities at Kepler Cheuvreux.
“It will have an impact on liquidity as investors may look elsewhere for easier things to trade given regulatory uncertainty. EU investors probably account for a third of the shareholder base for Swiss big caps,” he said.
Frustrated by a lack of progress on a new bilateral treaty it wants, Brussels has said that it will withdraw at year’s end its recognition of Swiss stock market regulations that allows EU-based investors to trade in Switzerland.
In a tit-for-tat response, the Swiss government said in June it would ban by decree trading of Swiss shares on exchanges in the EU. In this way, Swiss shares would no longer be subject to the EU trading mandate and EU investment firms would not need Swiss market equivalence to trade Swiss shares in Switzerland.
For Swiss companies whose shares were listed on both a Swiss and a foreign stock exchange before Nov. 30, like LafargeHolcim , foreign stock exchanges can keep trading them without obtaining recognition next year.
The ordinance the government unveiled on Friday puts that plan into effect. It will have no effect on market participants if the European Commission extends Swiss regulatory equivalence by the end of the year.
The Swiss Bankers’ Association said on Friday it welcomed the measure as it created “clarity and the greatest possible security for markets and market participants”.
It said that banks now had one month to implement the measure as they would, for example, have to redirect their trade orders to trading venues compliant with Swiss law. (Reporting by Michael Shields and Silke Koltrowitz)