The U.K. is set to reverse a ban on trading in Swiss shares following its exit from the European Union.
The Treasury plans to put legislation to lawmakers in the coming days that will take effect three weeks later if approved, according to a spokesman. The story was first reported by the Financial Times.
“Once in force, the Swiss State Secretariat for International Financial Matters have indicated they will reciprocate by removing restrictions on U.K. trading venues,” the spokesman said.
The move has been expected. In September, the U.K. confirmed it would introduce the legislation as soon as its equivalence powers came into effect. Exchange operator Cboe Europe has said it’s planning to reintroduce Swiss-listed securities in the U.K. once British and Swiss mutual recognition is implemented.
The U.K. allowing Swiss shares to trade will do little to overcome the exodus of EU shares after Brexit. The three biggest venues in London that handle European shares saw almost all of this business shift into the EU on the first day of trading after the U.K. completed its exit from the bloc on Dec. 31.
Read More: Brexit Pushes Most Europe Share Trading Off Top U.K. Venues
Aquis Exchange Plc Chief Executive Officer Alasdair Haynes told Bloomberg TV on Jan. 4 that 99.6% of its European stock trading moved to its parallel venue in Paris. Cboe Europe saw 90% shift to its Amsterdam venue, while 92% of such trades on London Stock Exchange Group Plc’s Turquoise platforms were inside the bloc by 3 p.m. in London on Jan. 4, the first day of trading after Brexit. The moves represent about 4.6 billion euros ($5.6 billion) of trades, according to data from Cboe Global Markets Inc.
A political row led to the Swiss Stock Exchange losing EU recognition in 2019, a move the U.K. had to comply with while still a member of the bloc. Brexit has now freed it of those constraints.
London’s dominance as an investment-management hub is also uncertain. The European Commission is studying whether to tighten rules over how EU–based funds delegate the management of portfolios to investors outside the bloc. While delegation isn’t likely to be banned, Brussels could make it more expensive to manage funds from third-party countries such as the U.K. by increasing compliance and governance obligations.
Britain and the EU have agreed to draft a memorandum of understanding around the regulation of financial markets by March, an agreement that will supplement the broader Christmas Eve trade agreement, but which won’t be as legally binding. An agreement would still help establish a framework for granting equivalent access to each others’ markets, with predictable rules and proper consultation on any decision to withdraw access.
(Updates with FT previously reporting story in second paragraph.)