Federal Council extends transitional period for reporting of derivative transactions by small non-financial counterparties has decided to postpone the entry into effect of the reporting obligation for small non-financial counterparties (NFC-) until 1 January 2024.
See flash from LENZ & STAEHELIN
180920_Newsflash_September_2018_Federal Council extends transitional per…
FINMA publishes revised FMIO-FINMA confirming the categories of OTC derivatives subject to the clearing obligation
FINMA has introduced a clearing obligation for standardized interest rate and credit derivatives traded over the counter. The exact categories of OTC derivatives subject to the clearing obligation are listed in Annex 1 of the FMIO-FINMA. This Annex enters into force on September 1, 2018, which will trigger phase-in periods for the clearing obligation
See flash from LENZ & STAEHELIN
180518_Newsflash_May_2018_FINMA_publishes revised FMIO-FINMA_Final_1185634_1
FINMA publie l’OIMF-FINMA partiellement révisée
L’ordonnance de la FINMA sur l’infrastructure des marchés financiers (OIMF-FINMA) partiellement révisée introduit une obligation de compenser certains dérivés sur taux d’intérêt et dérivés de crédit OTC standardisés. Cette obligation de compensation est imposée par la loi sur l’infrastructure des marchés financiers. La FINMA détermine le moment de son introduction et précise quelles catégories de dérivés sont concernées. Elle a consulté la branche au sujet de ces modifications et repris sans modification les catégories de dérivés proposées dans les prises de position qui lui ont été adressées. L’OIMF-FINMA entre en vigueur le 1er septembre 2018. Les délais pour procéder aux premières compensations courront à partir de ce moment-là. Ils sont prescrits par l’ordonnance du Conseil fédéral sur l’infrastructure des marchés financiers.
L’obligation de compenser certaines catégories de dérivés OTC, définies par la FINMA, par l’intermédiaire d’une contrepartie centrale constitue un élément central de la réglementation suisse du négoce de dérivés. Les dérivés OTC sont des dérivés qui ne sont pas négociés sur une plate-forme de négociation telle qu’une bourse ou un système multilatéral de négociation.
https://www.finma.ch/fr/news/2018/05/20180516-mm-finfrav-finma/
FMIA reporting obligation for derivatives to start as early as October 2017
FINMA approved SIX and REGIS-TR as trade repositories for FMIA derivatives reporting in its Aufsichtsmitteilung 2017/2 on 3 April 2017. The announcement triggered the starting dates for the obligatory trade reporting under FMIA for large Non-Financial Counterparties (NFC+) and small Non-Financial Counterparties (NFC-):
Over The Counter derivatives (OTCs):
- 1 January 2018: NFC+ entities
- 1 April 2018: NFC- entities
Exchange Traded derivatives (ETDs):
- 1 July 2018: NFC+ entities
- 1 October 2018: NFC- entities
A deal must be reported no later than one day after the execution or if certain deal data has changed during the lifetime of the deal (modification).
FMIA’s impact on non-financial counterparties
Initially, non-financial counterparties – most of which are small (NFC-) – were quite relaxed due to the one-sided reporting rule and the rules stipulating that only large non-financial counterparties (NFC+) and financial counterparties (FC) must report. Furthermore, in contrast to EMIR, deals between NFC- firms do not have to be reported – placing all intragroup deals out of scope.
However, the devil is in the details. At a second glance, it becomes clear that more corporate firms will have to deal with reporting obligations.
Why more firms will have to deal with FMIA?
If Swiss NFC- entities trade with Swiss counterparties there is no obligation for the Swiss NFC-. But if the counterparty is a non-Swiss FC or NFC+, the reporting obligation falls back to the Swiss NFC-. Currently, reporting under EMIR is not officially granted equivalence to FMIA reporting and non-Swiss counterparties do not have to report under Swiss law.
In any case, Swiss NFC- firms must analyze their portfolio and counterparties to gain a clear picture of the impact of the reporting obligation.
Will Swiss NFCs- firms have to setup their own reporting solution?
Not necessarily, there are two other alternatives:
- If the non-Swiss counterparty provides a delegation service (meaning they have an interface to Swiss repositories) they could do the reporting on behalf of the Swiss entity.
- Third-party reporting is another option. Meaning a third-party service provider which is not counterparty to the deal can report the deal on behalf the Swiss entity as an external service.
Speculating on FINMA’s course of action regarding the equivalence of EMIR reporting until the reporting start date is, in our view, not realistic. FINMA has stated in its Aufsichtsmitteilung 2016/1 that FMIA reporting can be done only via Swiss-authorized infrastructures.
Swiss Federal Department of Finance launches consultation on the amendment of the FINFRAG
Newsflash_February_2017_FinfraG_Update III_Draft-FMIO
new Guidance 01/2017 published by the FINMA on January 31, 2017 on the deadlines for the exchange of collateral
under FINFRAG by Lenz & Stahelin
Newsflash_February_2017_FinfraG Update II
ISDA has published new documentation allowing counterparties to implement FINFRAG by Lenz and Stahelin
L&S_Newflash January 2017_FinfraG Update_New ISDA documentation (1)
STSA working paper on FINFRAG (nov 2016)
stsa_finfrag_working_paper_with_qa_final
FINMA publishes its Financial Market Infrastructure Ordinance
Based on the Financial Market Infrastructure Act (FMIA), the Federal Council has enacted the Financial Market Infrastructure Ordinance (FMIO), while FINMA has issued its own ordinance on financial market infrastructure (FMIO-FINMA). The latter contains implementing provisions on reporting requirements for securities trading, on clearing duties for derivatives, as well as on disclosure and takeovers (see also FINMA’s press release published on 20 August 2015). It will enter into force on 1 January 2016.
FINMA held a public consultation on FMIO-FINMA. Among the points mentioned by the respondents which FINMA could take into account was not to issue a separate circular on clearing duties for derivatives. These provisions have therefore been dealt with in the annex to FMIO-FINMA. The respondents also rejected the proposed relaxations on disclosure requirements and largely prefer to maintain the current rules, a point which is also reflected in FMIO-FINMA. Criticism of extending the implementing provisions on reporting requirements to derivatives securities trading could not, however, be taken into consideration since they are set out in the Federal Council’s FMIO and enhance investor protection.
prise deposition FINMA_final_de
ACTSR and DELOITTE are organizing a seminar on FINFRAG at Geneva the 17/11/2015. Please feel free to participate. See in the section EVENTS
The FMIA has been approved in July. See the flash from Lanz and Staeheler
LENZ STAEHELIN 150715_Newsflash_FinfraG
Our colleagues from SwissACT made a presentation (in German) last year:
20141020_SwissACT_FinfraG_Anhörung_WAK-N_final
FMIA (Financial Markets Infrastructure Act), also known as FinfraG (Finanzmarktinfrastrukturgesetz) Switzerland is the financial market infrastructure act regulating derivatives trading which is expected to come into effect end of 2015 – beginning of 2016. FinfraG regulates the derivatives trading, and is the equivalent to Dodd-Frank in the US and EMIR in the EU and is implementing the Pittsburgh G20 summit procedures for regulating derivatives trading.
End of March 2014, the consultation period for the new financial market infrastructure law has ended.
See the letter sent by ACTSR:
Reponse consultation LIMF 31032014
and the result of the consultations:
In June, the responses to the hearing were published. Subsequently, the Federal Council approved beginning of September the message to FMIA. The economic commission of Switzerland has released details on the start of the detailed discussion (only available in german and french). The definition of financial counterparties is subject to in-depth discussion. For commodity derivatives, the position limits (equivalent to MiFID 2) have been discarded as the regulation is not yet defined in the EU. Exceptions for small non-financial counterparties in regards to transaction reporting and additional obligations were discarded. The second meeting of the economic commission was held on the 9th of February 2015.
Update Feb 2nd, 2015: The Commission for Economic Affairs and Taxation has announced in mid-January that the detailed consultation has started. Position limits for commodity derivatives (as foreseen in MiFID 2) were proposed for rejection by the Commission, due to the fact that the execution of rules in the EU are not yet specified. Also exceptions for small non-financial counterparties (NfG) have been intensively discussed and rejected by the Commission. Subject to intense discussion is the definition of financial counterparties: for example, whether holding companies, collective investment schemes and pension funds are considered financial counterparties. The penalties for negligent violations of the reporting obligations are discussed. The 2nd meeting of detailed consultation was held on 9 February 2015.
Mar 20, 2015:During the spring session of the National Council (18.03-20.03.2015) the regulation has been reviewed. The national council has approved the regulation on the 20th of March 2015, with minor amendments.
May 20, 2015: The WAK commission has announced in its press release that contrary to the decision in the National Council, a clause is added where the Federal Council may introduce limits for commodity derivatives as long it conforms with international standards. This is to avoid that Switzerland will be used to circumvent international standards in the EU and US. In the overall vote, the Commission has passed FinfraG, with 11 to 0 votes and 1 abstention. FinfraG will be discussed next during the summer session on Tue, 06/02/2015.
June 2, 2015: FinfraG was treated at the summer session of the Council of States (on Tue, 06/02/2015). The content of the regulation remains essentially the same. Subject to discussions were the position limits and reporting requirements between small non-financial counterparties. The large chamber (the National Council) has declined the position limits and reporting obligations for small non-financial counterparties in the subsequent consultation.
The majority of the derivatives traded in Switzerland are concluded with an EU-counterparty. Therefore, necessary adjustments with the EU regulation EMIR (and with the American regulation Dodd Frank) are required in order to maintain transparent access to the respective markets and to be compliant with the G20 requirements.
Overview of the Obligations in FinfraG
The FMIA differs between 4 counterparty classifications (EMIR between 3). In comparison with the EU regulation, an additional category has been introduced which is small financial counterparties. This exempts smaller financial counterparties from connecting to a central counterparty. This is similar to the end user exception of Dodd Frank regulation in the United States. Also, intra-group transactions will not be subject to authorization. The non-financial counterparties are not supervised by any authority. The control takes place with the auditors.
The thresholds for counterparty classifications are not known yet. It is expected however, that the thresholds will be similar to the Dodd Frank and EMIR.
Overview of obligations for different counterparty types:
more information by GlassRubik GmbH can be found at
KPMG information on OTC Derivatives
pub-20140228-time-to-get-compliant-with-otc-derivates-regulations-en
a presentation made by GARP
finfraglearningfrominternationaleffortsforimplementingderivativeregulation_larsritter_090414
SFI organized a seminar on Tuesday, September 17, 2015 with Dr. iur. Martin Liebi. See the presentation.
Martin Liebi The Swiss Financial Market Infrastructure Act Swiss Finance Institute Geneva