Scoach Switzerland, the subsidiary company of the SIX Swiss Exchange has introduced new standards this week to ensure greater transparency in trading in warrants and structured products.
Scoach Switzerland introduced an internet-based quality control system on January 26 to ensure greater transparency in trading in warrants and structured products. Investors and market observers can check on the Scoach website how liquid a product is and how efficiently the issuer is making a market. This application has been jointly developed by Scoach Switzerland and SIX Swiss Exchange in close coordination with the major issuers.
The introduction of Quotes Quality Metrics (QQM) on all securities traded on Scoach means that investors can now get key answers to the vital questions: How liquid is the product? How narrow is the price spread? How efficiently and at what intervals does the issuer make prices in the course of a trading day?
The Swiss Structured Products Association (SSPA) welcomed the initiative.
Up to now, it has been generally difficult, or even impossible, for investors to measure the quality of market making. Market presence and fair market making by an issuer are of the utmost importance to investors. Quality metrics allows market marking on individual products to be quantified on a uniform basis and made publicly transparent.
In September 2008, following the recommendations of an ad hoc working group, the Commission for Structured Products (KSP) approved both the methodology behind and the publication of daily Quotes Quality Metrics (QQM). After a successful pilot phase in collaboration with the issuers, Quotes Quality Metrics are now published on Scoach website.
The following reference parameters (in future also with a ten-day history) are to be measured per market maker and per security and posted online at 2pm on the subsequent trading day:
The quality metrics will be applied to all securities traded on Scoach Switzerland, SIX Swiss Exchange is responsible for data delivery.
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