The Swiss group SIX, which operates the Swiss stock exchange as well as financial information and payments businesses, have announced that they are to establish a central trade repository for derivative transactions in cooperation with Swiss banks. This will enhance the transparency and traceability of derivative transactions, in accordance with regulatory requirements, and help improve financial market stability. The Swiss Financial Market Infrastructure Act (FMIA), which is currently in consultation, represents the legal basis for the creation of a trade repository.
The Swiss Financial Market Infrastructure Act (FMIA) provides for the creation of a trade repository for derivative transactions. The Act is set to enter into force at the end of 2015 or in early 2016. The aim is to enhance the transparency and traceability of both over-the-counter (OTC) and exchange traded derivatives. This information will allow supervisory authorities to identify risk concentrations and, therefore, systemic risk at an early stage. By establishing a trade repository for derivative transactions, the new Swiss legislation implements the G20 obligations agreed in 2009 in response to the financial crisis.
For whole Swiss financial market
Following discussions with Swiss banks, SIX has decided to establish and operate a central trade repository for the whole financial market. This represents both a major vote of confidence and a major challenge for SIX. The trade repository provided by SIX will record the details of derivative transactions that must be reported by banks and other counter parties. Following validation and a consistency check, the information collected will be passed on to the supervisory authorities, as well as aggregated and made available to the public in an anonymized form.
SIX believe that by establishing and operating the Swiss trade repository, SIX is further enhancing the attractiveness and innovative power of the Swiss financial market.
Trade Repositories in Europe
The ESMA approved trade repositories by 14 November were:
- CME TR
- ICE TVEL
It is not known whether SIX will require ESMA approval for their trade repository service, and, if required, when this will be granted.