The SIX Swiss Exchange is Switzerland’s primary stock trading center. Established in 1988, it became a vital part of the European financial landscape. Today, it is a significant support for the Swiss financial system, providing a platform for trading many types of securities, such as equities, derivatives, structured products, and bonds.
Here, we will take a look at the Exchange’s history and progress, highlighting its most incredible milestones:
History of the SIX Swiss Exchange
The SIX Swiss Exchange is Switzerland’s leading stock exchange in Zurich. Private investors founded it in the late 19th century. In 1908, it became a public company. It offers financial services and houses around 2,900 instruments like shares, warrants, funds, and bonds.
The Swiss Exchange aims to create a safe place for traders from 100+ countries to buy and sell securities. To do that, it uses top-notch market oversight and regulation. In addition, it sets high standards for trading conditions & infrastructure reliability, market transparency, and investor protection. That way, its members can make money over the long term.
In 1995, the SIX Swiss Exchange began its electronic trading platform. It was a huge step. It allowed traders to trade quickly, securely, and inexpensively. Technology advancements have improved things even more. For example, on-screen settlement systems let trades settle without paper. And now, with mobile apps, people worldwide can access info about their investments with a smartphone or tablet. All thanks to SIX Swiss Exchange technology.
Overview of the Exchange’s Products and Services
The Exchange offers its members, customers, and end-users many products and services. Four main categories include:
- Trading: Stocks, futures, options, ETFs, warrants, GICs, MFs, debentures, bonds, and margin trading are all available.
- Clearing & Settlement: Pre-trade services such as account setup & maintenance and post-trade services like safekeeping records maintenance are offered. Plus, margining and portfolio management toolsets.
- Risk Management: Solutions for efficient financial transactions, with tools for various orders and online systems for real-time monitoring.
- Technology: Market data apps, execution platforms, customer integration, proprietary customization, APIs, analytics, algorithmic trading.
FINMA and the Bank Council of the Swiss National Bank regulate the SIX Swiss Exchange. These two entities ensure the rules and regulations for trading and listing securities. To guarantee fairness, transparency, and efficiency, FINMA and the Swiss National Bank have put in place a system.
In this article, we will dig deeper into this system.
Overview of the Regulatory Framework
The SIX Swiss Exchange is regulated by FINMA – the Swiss Financial Market Supervisory Authority. FINMA works to safeguard investors’ legal and economic interests. They also ensure that companies listed on SIX have a compliant framework.
SIX’s regulatory framework has four parts: rules, regulations, principles, and guidelines. These provide clarity and guidance for companies wanting to be listed.
- Rules set out requirements for eligibility, disclosure, and continuity. They also impose limits on the size and number of offerings. Companies must use these rules when applying for listing and during admission. Plus, they must get FINMA’s approval.
- Regulations include conditions for offers of shares or debt instruments underwritten by an investment firm or bank. They cover due diligence and pricing mechanisms.
- Principles determine corporate governance matters pre- and post-listing. They promote transparency and trust between issuers, intermediaries, banks, asset managers, investors, market makers, and other stakeholders. Areas include executive remuneration, audit arrangements, corporate policies, anti-bribery, and anti-money laundering.
- Guidelines provide comprehensive guidance for listing procedures from filing to admission and risk management. They include criteria for SIX Exchange acceptance, reporting obligations, and relationship with financial institutions.
Regulatory Bodies Involved
The regulations for any industry need multiple bodies with distinct roles to ensure they are followed. Regarding regulation, regulations must be made and enforced by separate governing bodies to ensure everything is done right and openly.
Organizations that create an industry’s regulatory framework can comprise governmental, non-governmental, global, regional, or local groups. For example, in the US, some industries are regulated directly by the government. In contrast, others are overseen by agencies like the SEC (Securities & Exchange Commission) and the FTC (Federal Trade Commission).
Additionally, self-regulatory organizations (SROs) manage self-regulatory plans in specific industries. Though the organizations that regulate an industry will vary depending on the sector, some types of organizations that handle various industries are:
- National Regulatory Agencies, such as the European Securities & Markets Authority (ESMA), US Environmental Protection Agency (EPA), and Canadian Radio-television and Telecommunications Commission (CRTC).
- International Regulatory Agencies like the World Trade Organization (WTO).
- Self-Regulatory Organizations (SROs) or trade associations like FINRA in finance or NASDAC in energy commodities trading.
- Nonprofit Organizations like Consumer Reports or Ethical Trading Initiative – a worldwide alliance that works to secure workers’ rights globally. They encourage voluntary codes of conduct and monitoring mechanisms in workplaces across the globe.
SIX Swiss Exchange was once referred to as SWX Swiss Exchange. Established in 1995, it is one of the biggest exchanges in Switzerland. It is governed by the Swiss Financial Market Supervisory Authority (FINMA). The SIX Swiss Exchange is composed of 3 markets. An on-exchange market, a remote market, and an international market.
Let us investigate further into the market structure:
Types of Markets and Instruments
The SIX Swiss Exchange was founded in 1995 and started operations in 1996. It offers services such as listing, trading, settling, and securities registry. It trades shares, bonds, warrants, rights issues, and mutual funds backed by physical assets like stocks, bills, or trusts. It is an order-driven market with a bid and an asking price for the instruments.
The SIX Swiss Exchange has three main markets: the Regulated Market, the Alternative Platform Structured Market (APSM), and the Structured Product Segment (SPS).
- The Regulated Market is an organized market that follows Swiss law. It includes companies listed on the main SIX Swiss Exchange list that must be transparent and reported regularly.
- The APSM is only for more prominent issuers, where they trade financial instruments other than equity securities. Companies listed on other exchanges can also use this platform to issue foreign equity securities in addition to their traditional instruments.
- The SPS is designed for structured investment products like bonds and notes issued by investment funds or institutions investing in foreign share markets, particularly emerging markets. All products must be issued by legal entities located in Switzerland, and they must meet certain disclosure requirements.
Trading Hours and Settlement Procedures
The SIX Swiss Exchange operates weekly from 0900-1730 hrs (CEST or CET). Trades on the SIX Swiss Exchange follow two settlement cycles, T+2 (trade date plus two days) and T+0 (same day). Books close every fifteen seconds in the T+2 cycle. Unless specified, all trades are settled by delivery versus payment (DVP).
Transactions in Swiss francs can only be settled on Swiss National Bank accounts. Transactions in foreign currencies are settled via SWIFT or EBA-Cassette. These must involve members of the same group of banks with shared access to SWIFT/EBA-Cassette or Central Counterparties with common access to Swift nets for Euro and USD payment orders.
Notifications are sent via electronic channels such as SWIFT message Type MT535. Instructions must include ISIN, complete issue references, number of issued securities, etc. Settlement messages must have a unique identifier from trade and transaction levels.
Broker-dealers must provide an audit trail with participants’ confirmation throughout the lifecycle process (TRADE, SETTLEMENT, COLLATERAL). These must include a unique identifier generated at the trading level.
Companies wishing to list on the SIX Swiss Exchange must fulfill certain criteria. For example, the firm’s capitalization, liquidity, the number of shareholders, and more.
Let’s delve into the listing requirements and the steps to get listed on the SIX Swiss Exchange.
Overview of Listing Requirements
The SIX Swiss Exchange is the top stock exchange in Switzerland, founded in 1877. It offers competitive prices, low transaction costs, and various services. To be listed, companies must follow the rules and provide disclosure info.
Two types of listing are available. The initial listing requires the following:
- A long-standing existence;
- A sound ownership structure;
- Appropriate corporate governance;
- Reliable disclosure of financial reports;
- Adherence to international accounting standards.
The tertiary listing requires firm size, control, and market capitalization.
Post-list admission requires transparency rules and mandatory notifications to prevent insider trading.
Listing Fees and Fees for Admitted Securities
Fees for admitted securities to the SIX Swiss Exchange must be paid in either CHF or EUR.
Listing fees include an admission fee and a program fee.
- For shares or other tradable debt securities, the admission fee is CHF/EUR 1,500.
- For units or certificates, the admission fee is CHF/EUR 5,000.
- The average program fee as of May 2007 is CHF/EUR 500 per annum.
- For new programs that exceed certain thresholds, there is an additional charge of CHF1 per yearly unit rate programmed until termination.
- Until December 31, 2021, a one-time administrative fee of EUR 20 will also be applied to each security admitted to trading.
Refer to SIX Swiss Exchange Fee and Listing Rules for more details on fees.
Clearing and Settlement
The SIX Swiss Exchange is the primary stock exchange in Switzerland and the largest one. Therefore, clearing and settlement are very important for the functioning of the Exchange and all securities markets.
This section will explore the history of the Exchange’s clearing and settlement processes and how they have altered over time.
Overview of Clearing and Settlement
Clearing and settlement exchange the financial parts of a securities deal between a buyer and seller. SIX Swiss Exchange offers a modern post-trading system for exchange-traded products, with clearing and settlement services since 1985. It works to reduce the risk of default in trading.
SIX Swiss Exchange’s Rules & Regulations give the basis for all its clearing activities. They include processes, collateral management, contractual requirements, and laws for non-member trading. Participants must follow these rules when using the exchange system.
When trading over the SIX Swiss Exchange system, participants must do certain things:
- Correctly document positions
- Have bank accounts for margin calls
- Submit orders before the deadline
- Give valid instructions for settlement
- Reconcile daily
- Set up custodianship in line with laws
- Have enough money for margins
- Accept transfer forms for tax reasons
- Complete post-trade confirmation promptly
If they don’t, they could lose transaction costs and face penalties.
SIX Swiss Exchange’s clearing and settlement process have four stages:
- Trade Instruction: On the trading day, each party electronically sends their trade instructions to SIX Securities Services. These securities typically come from custodian banks or CCPs.
- Transfer of Investments: After all deliveries are settled, positions in financial instruments are traded the day before being transferred to SIX’s policyholders’ accounts at transparency.
- Settlement Pool: At trading day end, unsettled positions from opposing buy and sell orders are combined into one “settlement pool.” It represents a failure that requires relief.
- Instruction for Payment: Finally, SIX creates an education for payment or delivery of funds/securities from one broker/bank to another. These transactions usually settle on T+2 and may extend to T+3 due to public holidays and conditions in Switzerland.
The SIX Swiss Exchange is a significant stock exchange in Europe. It started in the 19th century and has been an advanced exchange. It provides multiple trading platforms like SES, EIT, and SEM.
Let us check out these trading platforms!
Overview of Trading Platforms
The SIX Swiss Exchange is the most extensive Exchange in Switzerland and a significant exchange in Europe. It has four trading platforms in use, each with its purpose.
Trading Platform Swiss Exchange (TPSE) ‘s primary platform is sophisticated and deals with many products. It supports full trading cycles and limits order types. Client orders, market makers, and broker orders can be processed. TPSE also provides analytics and real-time data for dealers.
The Equities platform allows companies from all over Europe to trade, invest and manage stocks within their own countries. Orders can be changed, added, or deleted during trading hours through electronic access points connected to the SIX systems.
The Secondaries market assists businesses seeking new capital by providing liquid secondary markets. It is done by introducing new investors into previously closed markets due to foreign law restrictions.
The ETFs platform offers automated transactions and issuer-based liquidity solutions. It reduces settlement risk and complexities. This platform also provides efficient customer service applications making it attractive to investors. They can access both domestic and international exchanges with ease and speed.
Access to the Trading Platforms
SIX Swiss Exchange provides various options to trade on its Exchange. The leading platform is SIX X-stream, a multi-asset system that allows direct market access and high-frequency trading. Professional Clients have direct access, while Non-Professional Clients can trade via SIX’s Commercial Partners.
Furthermore, investors can use the same platforms they use for other markets, such as:
- Reuters Trading for Professional Clients
- Bloomberg Professional Service for Non-Professional Clients
- MetaTrader4 (MT4) for Non-Professional Clients
- Equinova for both Professional and Non-Professional clients
In addition, traders can use the Turquoise Derivatives Platforms (TDP) for risky investments with derivatives. Real-time order book information is available using technologies like FIX and Xetra, providing transparency in financial markets. Clients can also utilize bridging software through Liquidnet Prime Brokerage services or broker-operated systems like FlexTRADER Plus or ICE OTC Link ATS.