Federal Council adopts dispatch on Financial Market Infrastructure Act

Bern, 03.09.2014 - Today, the Federal Council adopted the dispatch on the Financial Market Infrastructure Act (FMIA). The act will adjust the regulation of financial market infrastructures and derivatives trading in line with market developments and international requirements. This will sustainably strengthen the stability and competitiveness of Switzerland's financial centre.

The FMIA governs the organisation and operation of financial market infrastructures. The provisions that are currently dispersed in various federal acts will be combined consistently in a single law and adjusted in line with changed market conditions and international standards. The stock exchange regulations are largely the same as those already contained in the Stock Exchange Act. In particular, the existing principle of self-regulation, which has proved its worth in this area, will be maintained.

The very vague term "institution which is similar to a stock exchange", which is outdated by international standards, will be replaced by the precisely defined and more easily distinguishable terms of "multilateral trading facility" and "organised trading facility". Multilateral trading facilities differ from stock exchanges in that, although they admit securities for trading, there is no listing. They are subject to regulations which are similar to those for stock exchanges. In contrast, organised trading facilities are not considered as independent financial market infrastructures; instead, their operation remains with banks, securities dealers, stock exchanges and multilateral trading facilities. Certain specific obligations, particularly regarding organisation and trading transparency, are imposed on the operator of an organised trading facility. The transparency requirements for multilateral and organised trading facilities also address the problem of dark pools, i.e. trading venues that have lacked transparency until now. Moreover, the FMIA will establish the basis for regulating high-frequency trading, and restricting it if necessary.

In the area of financial market infrastructures, a general licensing requirement will additionally be introduced for central counterparties, central depositaries, trade repositories and payment systems. Licensing conditions and obligations which are specifically tailored to these financial market infrastructures are also set out. Until now, FINMA could subject central counterparties, central depositaries and payment systems to the Banking Act or Stock Exchange Act in certain cases. There was no regulation at all for trade repositories.

Aside from the supervisory law requirements for financial market infrastructures, the FMIA contains all of the regulations that apply in relation to securities and derivatives trading for all market participants (market rules of conduct). These include the provisions on the disclosure of shareholdings, public offers, insider trading and market manipulation which are currently enshrined in the Stock Exchange Act, as well as the new regulations for derivatives trading, which are in line with international standards.

The vast majority of Swiss derivatives trading is currently cross-border and largely takes place with the EU. The proposed derivatives regulations are thus based primarily on EU law. Consequently, the three key obligations for derivatives trading should apply in Switzerland too in the future: clearing via a central counterparty, reporting to a trade repository and risk mitigation. Unlike in the EU, however, exceptions are to be created for smaller contracting parties in the financial sector for reasons of proportionality and with reference to the corresponding US regulations. In terms of the obligation to conduct derivatives transactions via a stock exchange or another trading facility, the bill sets out the corresponding legal basis. However, the obligation should not come into force until it has also been introduced in the partner states.

Furthermore, the FMIA will replace the administrative assistance provisions that are currently provided for in various financial market laws with a uniform set of regulations in the Financial Market Supervision Act. This is in line with international requirements in the area and, just like the regulations in the Tax Administrative Assistance Act, makes provision for the possibility of restricting the client procedure if the purpose of the administrative assistance and the effective performance of the requesting authority's tasks would be compromised by prior notification of the client. In addition, an explicit basis is established for cooperation with international organisations and bodies.

Address for enquiries

Roland Meier, Media Spokesperson FDF
Tel. +41 58 462 60 86, roland.meier@gs-efd.admin.ch


The Federal Council

Federal Department of Finance