EU won’t pull UK market access amid Brexit: Lombard

Bloomberg

The European Union is unlikely to withdraw the UK stock market’s equivalence status as a Brexit “negotiating tool” after withdrawing market recognition from Switzerland earlier this month, according to Lombard Odier.
The UK’s equity market is almost twice the size of Switzerland’s and London’s clearing houses, which guarantee contracts even if one side proves insolvent, are a “core part” of Europe’s trading infrastructure, Stephane Monier, chief investment officer at Lombard Odier, wrote in a note.
“The UK is watching closely for any indication that the European Commission may try to use similar negotiating pressure over Brexit,” Monier said.
Stocks from Nestle SA to Swatch Group AG have been trading without a hitch since July 1, when Switzerland’s never-before-tested provisions to safeguard liquidity kicked in.
The move followed a showdown with the EU after talks over a political agreement between the two sides ended in deadlock.
For now, Switzerland’s “retaliatory” measures appear to have defended the Swiss stock market, and had “little discernible impact on trading operations, in terms of both price execution and liquidity,” Monier said.
“The disagreement with Switzerland is required watching for anyone interested in what may lie ahead for the UK and the continent’s biggest trading market post Brexit.”