On 14 September the Federal Council in Bern issued this press release with saying: “During its meeting on 14 September 2018, the Federal Council decided to bring the derivative transactions reporting duty for small non-financial counterparties into effect on 1 January 2024. The reporting duties of other market participants are not affected by the decision.”
There was no warning of the change of policy. It came as a bombshell to the corporates and service suppliers who have been preparing for many months fior the new derivatives reporting requirement in 1 January 2019. Some suppliers invested heavily in amending their systems to support FinfraG reporting which was a major change, and had, even, signed many clients. Some clients, who were ready to start with the reporting, had aleady been onboarded.
Financial Market Infrastructure Act and reporting duties
The Financial Market Infrastructure Act (FinMIA), together with the associated ordinance, came into force on 1 January 2016. It regulates the organisation and operation of financial market infrastructures and market conduct concerning derivatives trading, including a reporting duty for derivative transactions. This reporting duty required market players to report such transactions to central trade repositories. At present, the reporting duty already applies for financial counterparties (including banks and insurers) and certain non-financial counterparties.
It was planned that this would come into force for corporates on 1 January 2019. This required much preparation corporates and suppliers which they have been working on for months.
Everyone went ahead as planned, particularly since the Swiss Financial Market Authorities on September 2, 2018, confirmed that no further postponement was planned.
Federal Council changes mind
Press Release: “During its meeting on 14 September 2018, the Federal Council decided to bring the derivative transactions reporting duty for small non-financial counterparties into effect on 1 January 2024 and to extend the corresponding transitional period.”
The Press Release explains: “The Federal Council based its decision on the fact that the FinMIA is to be reviewed in the coming years. This is partly because we are already witnessing the emergence of international developments, e.g. in the European Union, and technological developments, e.g. in the fintech area, that could give rise to a revision of the FinMIA. The Federal Department of Finance (FDF) will work on reviewing the FinMIA from 2019. Against this backdrop, the reporting duty for small non-financial counterparties is to be postponed until this review – and any adjustment to the FinMIA – have been completed.”
- Why on 2 September, did the Swiss Financial Market Authorities confirm that no further postponement was planned, yet only days later the Federal Council announced the posponement to 2024?
- Why was there no warning, as the international developments mentioned have been happening for years?
- Can the authorities be trusted to honour their 1 January 2024 deadline?
- Who is going to compensate the corporates and suppliers for all their development that is going to be wasted?
- Who is going to fine the Federal Council, and the Federal Department of Finance for their irresponsible behaviour like banks are fined for irresponsible behaviour?
- Will the authorities apologise? Unlikely, there is no hint of an apology in the Press Release.
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