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Switzerland Consults On Financial Market Infrastructure Act

by Ulrika Lomas,, Brussels

24 December 2013

The Swiss Federal Council has launched a consultation on the Financial Market Infrastructure Act (FMIA).

The FMIA governs the organization and operation of financial market infrastructure. The provisions that are currently dispersed in various federal acts will be combined into a single law and adjusted in line with changed market relationships and international standards, to strengthen the stability and competitiveness of Switzerland's financial center.

Commenting, the Swiss Federal Department of Finance (FDF) explained that: "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."

It added: "However, the term institutions similar to stock exchanges will be replaced with the more precisely defined terms of multilateral and organized trading systems. A new general authorization obligation will apply for central counterparties, central depositaries and trade repositories."

The FDF continued: "With the FMIA, derivatives trading will also be governed in line with the applicable international standards, whereby the FMIA is primarily oriented towards European law. Consequently, the three key obligations for derivatives trading should apply in Switzerland too in the future: settlement of derivatives transactions via a central counterparty, reporting to a trade repository, and risk minimization."

"Regarding the obligation to conduct derivatives transactions via a trading platform, the bill already contains the corresponding legal basis. However, it should not be put into force until the trading platform obligation has been introduced in partner states as well."

The FDF ended: "Finally, because of their close factual connection with trading platforms, the securities dealer categories of issuing and derivatives houses, dealers acting for their own account and market makers will be transferred from the Stock Exchange Act to the FMIA. Also the applicable provisions on the disclosure of holdings, public takeover bids, insider trading and market manipulation will be removed from the Stock Exchange Act and incorporated virtually unchanged in the FMIA."

The consultation ends on March 31, 2014.

TAGS: Finance | law | stock exchanges | Switzerland | standards | regulation | trade | Europe

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