Regulation of bond trading: Setting the scene
The following chapter will provide an overview of the key regulatory requirements for trading professionally in securities in the form of a bond in Switzerland.
A bond in the form of a «security» in the sense of Art. 2 para. 1 lit. b FinfraG/FMIA is offered at uniform conditions to multiple parties. Securities are, in other words, standardised, certificated and uncertificated financial instruments suitable for mass trading. They are thus either offered publicly in a similar structure and denomination or placed with more than 20 clients, unless they are being created specifically for individual counterparties.
A security in the form of a bond can trigger multiple legal consequences when being traded. These consequences are:
- Persons professionally trading in securities will potentially have to apply for a licence as a securities dealer (the Swiss equivalent of an investment firm or broker/dealer).
- Facilities allowing for the multilateral trading of securities require a licence as a stock exchange or multilateral trading facility (MTF).
- Facilities allowing for the bilateral trading of securities must be operated by a duly licensed operator (the Swiss bilateral version of an OTF,which replaces the Systematic Internaliser in the EU).
- The public offering of securities requires a prospectus. The listing of securities on a trading venue (stock exchange and MTF) also requires the filing of a listing application and the creation of an accompanying prospectus.
Director, PwC Legal Switzerland
Tel: +41 58 792 28 86