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SIX issues lessons in preparing for Brexit
GC SPOKE TO THOMAS ZEEB , HEAD OF SECURITIES AND EXCHANGES AT SIX , ABOUT THE LESSONS THE UK SECURI- TIES INDUSTRY MIGHT WISH TO TAKE FROM THE SWISS EXPERIENCE .
To many , the parallels between Britain and Switzerland in their relations with the EU are not that clear , other than that they are both countries in Europe that are not or will not be part of that Union . Nevertheless , says Thomas Zeeb head of securities and exchanges at SIX , there is one respect in which Switzerland may have some useful experience to impart , having gone through the process of negotiation , albeit with the aim of a closer relationship with the EU than a more distant one . “ At a granular level , specific industries face different objectives and priorities ,” says Zeeb . “ For the exchange services industry ( listing , trading , post-trading ), one key element in a smooth relationship is the recognition of ‘ equivalence ’ among the various market infrastructures .”
On 21 December , last year , the EU Commission recognised the equivalence of the Swiss legal and supervisory framework for trading venues with that of the EU for a period of one year . While equivalence has therefore been recognised at a technical level , the temporary nature of the decision is an indication that complexities in negotiations cannot always be foreseen and that political as well as technical considerations need to be taken into consideration . “ For the EU to restrict capital flows in Europe and jeopardise market stability for political reasons in this manner is indeed odd ,” says Zeeb . “ This type of protectionism in the heart of Europe serves no purpose other than to create investor uncertainty , not just in Switzerland , but also in the reliability of the EU and its policy-making process . SIX is working closely with the Swiss government in its dialogue with the EU to correct this anomaly as soon as possible .” With that in mind , UK expectations may need to be managed . “ The UK financial services industry should not expect to be able to rely on a common-ground approach with Switzerland for a similar type of deal with the EU ,” Zeeb suggests . Nor is the EU likely to entertain special deals for the UK , precisely because of the implications that that may have for relationships with other third parties . While media coverage has so far tended to focus on the bilateral implications of the EU-UK negotiations , Zeeb points out that the new dispensation will ultimately have consequences for third parties in other countries that may have seemingly settled
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their arrangements with EU markets . For the Swiss securities industry , Brexit poses an additional consideration that depends to some extent on the progress of bilateral negotiations between the EU and the UK . “ Our clearing business serves as an example ,” says Zeeb . “ We currently enjoy registered overseas clearing house status with the UK under EU regulations for our CCP . “ While we would expect to have to re-apply for recognition in the UK post-Brexit , this can only be done once there is clarity on the UK ’ s position and rules post-Brexit and is dependent on the definition of the appropriate regulatory framework for that recognition ,” says Zeeb . “ As soon as there is clarity on that , we will submit our application for reapproval under whatever the new UK rules will be ,” says Zeeb .
Summer 2018 globalcustodian . com 15