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28 November 2018
The Financial Market Infrastructure Act and the Financial Market Infrastructure Ordinance came into effect on 1 January 2016.
The authorisation of the first Swiss and the recognition of a foreign trade repository by the Swiss Financial Market Supervisory Authority (FINMA) triggered the new reporting duties for Swiss market participants in connection with derivatives transactions.
Therefore, Swiss banks and securities dealers qualifying as big financial counterparties had to start reporting open derivatives transactions by 1 October 2017 to a trade repository and Swiss banks and securities dealers qualifying only as small financial counterparties had to do so by 1 January 2018.
Following the publication of the final EU Regulation 2016/2251 on the implementation of the obligation to exchange collateral, the Federal Counsel adapted implementing provisions for the duty governed by the Financial Market Infrastructure Act to exchange collateral for over-the-counter derivatives transactions that are not cleared via a central counterparty provided for in the Financial Market Infrastructure Ordinance in order to align them with the corresponding EU regulations. Specifically, the amendment removed the former provision whereby counterparties were not allowed to change the method of calculating the initial margins in a class of derivatives after an agreement has already been reached. Moreover, the rules on additional haircuts have been eased. As in the European Union, an additional 8% discount will no longer have to be applied in future if variation margins paid in cash are not in the agreed currency.
In addition, the clearing duty exception for occupational pension schemes and investment foundations was extended by one year to 16 August 2018. This deadline may be further prolonged. The transitional period for recording and disclosing the transactions of participants on a trading venue and securities dealers was also extended by nine months (ie, to 1 October 2018). However, recording and disclosure must be carried out with retroactive effect from 1 January 2018.
The Federal Council recently agreed to:
The corresponding amendment to the Financial Market Infrastructure Ordinance will enter into force on 1 January 2019. The reporting duties already in force for other market participants are unaffected.
The Federal Council based its decision on the fact that the Financial Market Infrastructure Act will be revised in the coming years due to international (eg, in the European Union) and technological developments (eg, in the fintech sector). Against this backdrop, the reporting duties for small non-financial counterparties will be postponed until these revisions have been implemented.
For further information on this topic please contact Alexander Vogel or Reto Luthiger at Meyerlustenberger Lachenal by telephone (+41 44 396 91 91) or email (firstname.lastname@example.org email@example.com). The Meyerlustenberger Lachenal website can be accessed at www.mll-legal.com.
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