Federal Council brings Financial Market Infrastructure Act into force as at 1 January 2016
Bern, 25.11.2015 - During its meeting today, the Federal Council brought the Financial Market Infrastructure Act (FMIA) and the Financial Market Infrastructure Ordinance (FMIO) into force as at 1 January 2016. Consequently, new rules that are consistent with the current international standards in the area will apply in Switzerland for financial market infrastructures such as trading venues and central counterparties, as well as for derivatives trading.
The FMIA, which was adopted by Parliament in the summer of 2015, will adjust the regulation of financial market infrastructures and derivatives trading in line with market developments and international standards. The act contains supervisory law requirements for the operation of financial market infrastructures, including stock exchanges, multilateral trading facilities, central counterparties and central securities depositories. In addition, it contains all of the rules that apply in connection with trading in securities and derivatives for all financial market participants, particularly the new derivatives trading rules, which are likewise consistent with the international standards.
The FMIO contains the Federal Council's implementing provisions for the FMIA. The ordinance is based on existing legislation, international requirements and EU law. In the area of financial market infrastructures, the new rules for combating the negative effects of high-frequency trading, in particular, are clearly defined. Moreover, the FMIO regulates the reporting duty of trading venue participants. It will now be necessary to report not only securities transactions to the trading venue, but also transactions in derivatives derived from securities admitted to trading on a trading venue. Furthermore, details for identifying the beneficial owner are to be provided. Both changes are essential for effectively combating market abuses. Account is taken of the reservations sometimes expressed during the hearing concerning the adjustment of the IT systems by providing for a transitional period up to January 2017, among other things. Comparable duties should take effect also in the EU by then. If the EU were to delay implementation, the Federal Council would consider extending the transitional period previously envisaged.
The clearing, reporting and risk mitigation duties in the area of derivatives trading are clearly defined. Occupational pension schemes and investment foundations will generally not have to fulfil the clearing duty until August 2017, which is in line with the current EU regulations.
A threshold of CHF 8 billion in open derivative contracts has been set for financial counterparties such as banks and insurers. Financial counterparties below this value are deemed to be small and have less extensive duties to fulfil.
The FMIO is supplemented by the National Bank Ordinance and the new Financial Market Infrastructure Ordinance-FINMA, which contain the implementing regulations for the FMIA that are under the responsibility of the Swiss National Bank (SNB) and FINMA.
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