SWX Europe

» see swxeurope.com as it lived, on the wayback machine

~ the last words ~

The last trade on SWX Europe went through on Thursday 30 April 2009. The following Monday, 4 May, the 32 Swiss blue chips that had been changing hands in London opened in Zurich instead, inside a newly created Swiss Blue Chip Segment on SIX Swiss Exchange. SIX had announced the closure the previous November, and about forty jobs in London went with it.

The thing that died that day had started as something braver. Tradepoint Investment Exchange went live on 21 September 1995, founded by three people who had left the London Stock Exchange, and it was the first alternative to the LSE in two hundred years of that institution. It ran an order-driven market, where buyers and sellers met in a book instead of going through the exchange's market makers, and it held a Recognised Investment Exchange license under the UK's Financial Services Authority. What it could not get was volume. The order book stayed thin and the trading stayed where it had always been.

The Swiss rescued it and then absorbed it. In 2000 the SWX Swiss Exchange agreed to put its blue chip segment into Tradepoint, and the joint venture opened on 25 June 2001 under the name virt-x, with SWX holding 39 percent of it. Switzerland thereby became the first country to move trading in its own leading shares abroad, and the reason was tax: Swiss stamp duty on share transactions made Zurich expensive against the rest of Europe at the time, and London did not charge it. SWX moved to buy out the remaining shareholders in late 2002, the purchase completed, and in March 2008 the name changed again, to SWX Europe.

~ the record ~

~ the london detour ~

The pan-European ambition never arrived. Around its first anniversary the platform was carrying roughly seven percent of European blue chip trading, and about ninety five percent of that was Swiss stock, for which it was the main market. The stated goal had been ten percent of European shares by that summer. Under the branding and the cross-border language, what existed was the Swiss blue chip market with a London address and a tax advantage attached.

Thin as that position was, it held for eight years, through the end of the dot-com bubble and into the 2008 crash.

~ the trip home ~

SIX gave its reasons in the flat register exchange operators use: moving the shares back would lower costs and reduce complexity for issuers. The announcement came in November 2008, the migration was set for the first Monday in May, and everything in between was a technical project.

Lee Hodgkinson, the chief executive, was already out the door. He started as chief executive of SmartPool, NYSE Euronext's non-displayed venue, on 1 May 2009, the day after the last trade on the exchange he had been running. The closure was finalized on 4 May, the same day the shares opened in Zurich.

~ seen from outside ~

Most of what gets written here, I used. This one nobody used, in the sense that word normally has. Its participants were member firms, and the only route by which it reached a person outside that list was the price of a Nestle or Novartis share on a statement. In Ankara in 2003 I could not have placed an order there if I had wanted to, and I did not know it existed.

What stays interesting is the shape of the decision. A country sent its most important shares to another country to spare its traders a tax, left them there for eight years, and then decided the arrangement cost more to maintain than the tax had ever saved.

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