Contractual recognition of stay & Swiss derivatives trading regulation

This NKF Banking, Finance & Regulatory Team Update 4/2017 provides you with key aspects and timelines relating to the following topics:

CONTRACTUAL RECOGNITION OF STAY – CHANGE OF FINMA BANKING INSOLVENCY ORDINANCE

Together with the entering into force of the Swiss Financial Market Infrastructure Act (FMIA) on 1 January 2016, a new article 12(2)bis was introduced to the Banking Ordinance whereby banks and securities dealers shall ensure, both on a single entity as well as at the group level, that new agreements or amendments to existing agreements which are subject to foreign law or a foreign place of jurisdiction are only entered into if the counterparty recognises FINMA’s right to impose a stay on the termination of agreements in accordance with article 30a of the Swiss Banking Act. On 16 March 2017, FINMA published certain amendments to the FINMA Banking Insolvency Ordinance (arts. 56 ss.) that further specify the requirements in connection with the recognition clause pursuant to article 12(2)bis of the Banking Ordinance.

SWISS DERIVATIVES TRADING REGULATIONS – UPDATE ON REPORTING OBLIGATION AND MARGIN RULES

On 1 April 2017, FINMA licensed SIX Trade Repository AG, Zurich, as a Swiss Trade Repository and recognised Regis-TR S.A., Luxembourg, as a foreign Trade Repository. Accordingly, counterparties may fulfil their reporting obligation under the FMIA by reporting to either of these Trade Repositories.

The rules for margining non-cleared OTC derivatives under the Financial Market Infrastructure Ordinance (FMIO) are currently being revised with the main goal of further aligning them with the EMIR rules. The consultation period ended on 13 April 2017 and the revised rules are expected to enter into force in the first half of August 2017.