Switzerland: Hearing on Financial Market Infrastructure Ordinance

Today, the Federal Department of Finance (FDF) initiated the hearing on the Financial Market Infrastructure Ordinance. The ordinance contains the Federal Council's implementing provisions for the Financial Market Infrastructure Act (FMIA). The hearing will continue until 2 October 2015.

On 19 June 2015, Parliament adopted the FMIA. The act will adjust the regulation of financial market infrastructures and derivatives trading in line with market developments and international requirements. The ordinance contains the Federal Council's implementing provisions for the FMIA. In particular, it fleshes out the authorisation conditions of financial market infrastructures and the duties of financial market participants in derivatives trading. It is based on existing legislation, international requirements and EU law.

Particularly worthy of mention in the area of financial market infrastructures are the pre- and post-trade transparency requirements for trading venues and organised trading facilities, which will now address the problem of so-called "dark pools" (trading venues that have lacked transparency until now). The new rules on combating the negative effects of high-frequency trading will also be clearly defined.

The clearing, notification and risk mitigation duties will be clearly defined in the area of derivatives trading. Reasonable transitional periods will be set for introducing the duties. Occupational pension schemes and investment foundations in particular must fulfil the clearing duty in principle only from August 2017, analogously to the rule in the EU. A threshold of CHF 8 billion in open derivative contracts will be set for financial counterparties such as banks and insurers. Financial counterparties below this value are deemed small and have less extensive duties to fulfil.

The ordinance is due to come into effect at the same time as the act, i.e. 1 January 2016. It 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 the Swiss Financial Market Supervisory Authority (FINMA).