SIX is implementing the Federal Council’s Financial Market Infrastructure Act despite “inconsistencies in the regulatory approach for trading platforms and systems” and organised trading systems not being considered independent elements of financial market infrastructure.
The act, which is recognised by SIX to be largely based on international standards, broadly defines the term ‘financial market infrastructures’ and encompasses all levels ranging from trading to clearing and settle to custody.
The act answers questions surrounding post-trade infrastructure, has increased transparency for all market participants and adheres to the principle of self-regulation of stock exchanges.
SIX intends to use the reporting obligation for derivative transactions stipulated in the law as an occasion to set up a central register under Swiss law and to make it available to market players, as was announced in June 2014.
Though SIX has stated that it acknowledges the benefits to the act, it has also commented it is “surprised that the Federal Council is deviating from the consultation process and, in particular, from international standards in the regulation of organised trading systems”.
In efforts to maximise transparency in the setting and distributing prices, European regulators have recommended uniform competitive conditions for all trading platforms.
In Switzerland, organised trading platforms are not recognised by the draft legislation as financial market infrastructure.
As a result, operators of organised trading platforms are only subject to limited duties with regard to organisation and trading transparency, which SIX claims does not create a level playing field for the trading centres and could cause unfair competition.
SIX is also urging for multilateral trade in equities to remain in the regulated and be supervised trading centres, such as the stock exchanges and multilateral trading systems, corresponding to international standards.
