SIX closes SWX Europe

Swiss financial conglomerate SIX Group has closed SWX Europe, its London-based exchange for Swiss blue-chip stocks.
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Swiss financial conglomerate SIX Group has closed SWX Europe, its London-based exchange for Swiss blue-chip stocks. The 32 stocks traded on the platform will be relocated to SIX Swiss Exchange in Zurich. The group will maintain a representative office in London to serve customers.

SWX Swiss Block, the non-displayed multilateral trading facility SWX Europe has been developing in conjunction with fellow dark pool NYFIX Euro Millennium, will be transferred to the Zurich operation, but will be otherwise unaffected.

SIX Group spokesman Werner Vogt said the decision to close SWX Europe was taken partly to grant traders simpler access to Swiss stocks and partly to cut costs. Those trading on the EU-regulated portion of SWX Europe previously had to take into account Swiss, UK and EU regulations. “We will save at least SFr15 million a year, which is not negligible given the pressure on margins our industry is going through,” Vogt told

According to Lee Hodgkinson, CEO of SWX Europe, competition in the European equities market played a big role in the decision. “In the current economic climate, maximising operational performance and cost management are vitally important, and that is unlikely to change for some considerable period of time. We have led the industry in reducing trading tariffs and we anticipate the price erosion will continue across European cash markets throughout 2009,” he said. “In that context, by consolidating our trading and technology operations in Zurich, we will reduce our cost base, thus improving our commercial positioning moving forward.”

Hodgkinson was sanguine about the platform’s performance. “We are undertaking this reunification from a position of great strength with good profitability, a market share of 90% and very strong trading volumes,” he said. “In October we did 4 million trades worth SFr 150 billion – it is our fourth best month on record.”

The Swiss Exchange’s decision to establish an operation in London for Swiss blue-chip stocks was originally taken because of the stamp duty rules in Switzerland, which put the exchange at a competitive disadvantage to other European platforms at a time when trading was becoming more pan-European.

But since 2006, when stamp duty was reduced, this has not been a significant impediment to trading in Switzerland. “Back in 2000, we lost market share to the London Stock Exchange because of stamp duty in Switzerland. Now, switching the trading to Switzerland won’t have any negative impact on market participants in London,” said Vogt.

The decision to close SWX Europe was not taken sooner largely because of the merger between the SWX Group, SIS Group and Telekurs Group, which formed the SIX Group at the beginning of 2008.