Swiss bourse spurns Frankfurt’s advances

The SWX said it would consider new cooperation agreements Keystone

The Swiss stock exchange (SWX) has decided against a merger with Germany’s Deutsche Börse, but says it is ready to discuss other forms of cooperation.

The SWX’s decision comes in response to an invitation from Deutsche Börse in July to start talks.

The SWX ruled out for the time being any sale, merger or total integration of the group into another exchange, said a statement following a board meeting on Friday.

The board added that, as an “independent organisation”, it was ready to hold talks on further cooperation with Deutsche Börse.

Responding to the SWX decision, Deutsche Börse said it would like to start talks on deeper cooperation “so we can expand our existing partnership”.

The two bourses already have a successful partnership as joint owners of the Eurex futures and derivatives exchange. But analysts say a full-scale merger would bring few extra benefits for many of SWX’s smaller members.

The Swiss exchange is controlled by an association of 55 banks, all of which have equal voting rights.

Banking secrecy

Dealers say Swiss banks are primarily concerned with the regulatory hurdles a merger might involve, as well as the possible threat to banking secrecy.

One Swiss banker was quoted as saying that, despite the logic of a merger, Swiss banks preferred to wait and see what rules Brussels might want to impose before joining forces with an EU-based partner.

Analysts say a merger would make a lot of sense, and that SWX should be considering its options carefully.

“It’s expected there will be fewer exchanges in ten years’ time and I think exchanges need to make sure they are in the lead of consolidating and of leading the merger,” Hilary Cook, director of investment strategy at Barclays Stockbrokers in London, told swissinfo.

She added that there were several other possibilities for cooperation between SWX and Deutsche Börse short of an outright merger.

“There are an awful lot of possibilities for closer cooperation. There’s already quite a lot of shared business across the exchanges and of course a common language helps as well.”

swissinfo with agencies

In brief

Analysts say merger would make sense since Europe’s bourses are expected to consolidate over the next ten years.

But some Swiss banks which control the SWX are thought to be concerned that a tie-up could compromise banking secrecy and expose them to new regulations from Brussels.

Key facts

Deutsche Börse and the SWX are joint owners of the Eurex futures and derivatives exchange.
A merger would have created the third largest bourse in Europe (after London and Euronext).
The SWX already has a presence in London with its virt-x subsidiary – a pan-European blue chip exchange.