Alasdair Haynes, CEO of the London-based Aquis exchange, said the EU should grant a year's extension to allow the SIX Exchange in Zurich to serve investors across the bloc.

If denied this permission known as equivalence, Switzerland, which is not a member of the EU, has said it would retaliate by banning the trading of Swiss shares on platforms in the EU.

"We are lobbying very aggressively for equivalence to be granted, even if extended by another year. It's incredibly disappointing to see that politics is playing a part here," Haynes told Reuters.

The bulk of trading in Swiss shares like heavyweights Nestle, Novartis, Roche and UBS takes place in Zurich, which would lose some business if equivalence was denied.

Significant amounts are also traded on rival platforms in the EU, such as Aquis, Cboe Europe and the London Stock Exchange Turquoise, meaning they could lose business as well due to the Swiss tit-for-tat ban.

Haynes said equivalence should be granted by the EU's executive European Commission if the Swiss Exchange fulfils all the technical requirements for that, which he believes it does.

Equivalence was only granted for a year so Brussels could work out its future relationship with another financial centre, Britain, which is leaving the EU next March, Haynes said.

Given there is still uncertainty over Brexit, equivalence ought to be granted to the Swiss for another year, he added.

"We are monitoring the situation on a daily basis," Haynes said. Aquis trades 5 percent of Swiss shares in Europe.

Mark Hemsley, president of Cboe Europe, which trades over 20 percent of Swiss shares, said the EU could end up extending permission to Switzerland at the last moment.

"I am prepared for the fact that we may not be trading Swiss stocks in the first three months of next year, but the way these things have been left, everyone is leaving every possible door open until the last minute," Hemsley told Reuters.

Once Britain has left the EU next March, it and Switzerland could in theory agree that Swiss shares resume trading on platforms in London, Hemsley added.

The LSE declined to comment.

Haynes said if the Swiss ban went ahead, it would mark a return to "monopoly pricing", counter to the EU's securities rules which aim to foster competition and customer choice.

(Reporting by Huw Jones; Editing by Alison Williams and Mark Potter)

By Huw Jones