FINMA guidance on the postponement of certain transition periods, on equitable compliance under EMIR, and exchange of collateral
The transition periods set out in Article 129 Financial Market Infrastructure Ordinance (FMIO) and Article 58a of the Stock Exchange Ordinance (SESTO) regarding specific provision relating to trading venues and organized trading facilities as well as the recording and reporting obligations were postponed until January 1, 2018 on June 29, 2016. FINMA has issued further guidance on the following points:
Equitable compliance: (Provisional) equivalence of EMIR for the fulfillment of the obligations under FMIA
FINMA recognizes that the main obligations to be fulfilled under FMIA can be fulfilled under EMIR on a provisional basis until the corresponding obligations under EMIR are final. This permits the counterparties which are subject to the clearing obligation (Article 97 para. 1 FMIA), reporting obligation (Art. 104 para. 1 FMIA) and risk mitigation obligations (Art. 107 para. 1 FMIA) to fulfill these obligations under EMIR from the date on which they come into force, provided that the relevant conditions are met. Affected financial market participants should however keep in mind that the reporting and clearing obligation must be fulfilled through a recognized or licensed financial market infrastructure (Art. 95 let. b FMIA).
Potential extension of the deadline for the exchange of collateral (initial and variation margins)
The deadlines for the exchange of collateral (initial and variation margins) (Art. 131 para. 4 and 5 FMIO) are aligned with the corresponding deadlines under EMIR which are not yet final. This means in other words that the deadlines for the initial and variation margins under FMIA will be postponed accordingly if the initial and variation margin obligations under EMIR will kick in later than the current deadlines set forth in the FMIO.
Organized trading facilities (OTF): Postponement of deadlines and new circular
Multiple obligations related to organized trading facilities (OTF) have been postponed until January 1, 2018. These are:
- Pre-trade transparency of trading venues (Art. 27 FMIO);
- Post-trade transparency of trading venues (Art. 28 para. 2 to 4 FMIO);
- IT-systems to ensure an orderly and resilient trading activity (Art. 30 para. 2 and 3 FMIO);
- Provisions of a trading venue related to algorithmic trading and high frequency trading (Art. 31 FMIO);
- Guarantee of orderly trading activities (Art. 40 FMIO);
- Algorithmic trading and high frequency trading, pre-trade transparency, and post-trade transparency for securities (Art. 41 to 43 FMIO).
FINMA also plans to issue a new circular outlining its practice on the operation of OTFs by the spring of 2017.
Record keeping and recording requirements (Journalführungspflicht) as well as the reporting requirements for securities and derivatives transactions (Meldepflicht): Postponement of deadline and new circular
The deadlines for meeting the new requirements under the record keeping and recording requirements as well as the reporting requirements for securities and derivatives transactions (Art. 129 FMIO and Art. 58a SESTO) have been postponed until January 1, 2018. FINMA will also issue a new version of the circular 2008/4 “Securities Journal” reflecting the changes.
No Trade Repository has yet been licensed or recognized
FINMA confirms that as of 7 July 2016 no trade repository has yet been licensed or recognized in Switzerland. At the current time, we expect the first trade repository to be licensed no later than during the third quarter of 2016.
No Central Counterparty under FMIA has yet been licensed or recognized
FINMA confirms its plan that it will decide on the categories of derivatives subject to clearing during the recognition and licensing process of central counterparties. It has also confirmed that on July 7, 2016 FINMA has not yet licensed or recognized a central counterparty under FMIA.
If you have any further questions, please feel free to contact Günther Dobrauz, Martin Liebi, Michael Taschner or Simon Schären.