The Swiss Federal Council Commissions Modification of Financial Market Infrastructure Act to Reflect Technological and Regulatory Developments
The Financial Market Infrastructure Act (FMIA) will be amended by the middle of 2024, according to a directive from the Swiss Federal Council to the Federal Department of Finance (FDF) on September 30, 2022.
Additionally, it was agreed that minor non-financial counterparties will be subject to the reporting requirement for derivatives transactions starting on January 1, 2028. The Federal Council is giving the affected enterprises more legal security. Other market participants' existing reporting obligations remain unaffected.
The Swiss Federal Council's research suggests a thorough evaluation and potential FMIA modifications to market realities, regulatory expectations, and global standards.
What Does the Swiss Federal Council Seek to Amend in the FMIA?
To evaluate whether further action is necessary, the paper advises reviewing several current regulations, including those governing short-selling, potential connections between FinTech and payment systems and transactions, and the transparency standards for ETFs and ETPs.
This contribution outlines specific suggested revisions with an emphasis on a revised definition of OTFs. Aside from that, it clarifies CSD and payment system definitions, transaction reporting, shareholder disclosure, and market abuse restrictions.
The amendments focus on the following:
- Simplifying requirements to recognize overseas trading venues
- Classifying counterparties in cross-border scenarios
- The formalization of the implementation of preventive liquidation plans by specific DLT trading facilities
- Introduction of particular insolvency resolution tools, especially for CCPs
- The introduction of a high-frequency trading definition in the FMIO or FMIA
The Swiss Federal Council wants to enhance communication between foreign TRs and local authorities in the report. According to the Council, it could be accomplished by adopting international standards and modifying regulations governing data interchange as part of administrative aid.
The rolling-average threshold calculation approach for EMIR Refit is to be aligned, according to the Council. This suggests that an annual determination should take the place of the 30-day rolling average used to compare an NFC's positions to the clearing levels.
For NFCs, whose computation requirements are comparatively demanding, this simplification in line with EU law is welcome news.