Watch the short summary video of Swiss FMIA (FinfraG) reporting.
Swiss FMIA (FinfraG) Reporting
The Swiss Financial Market Infrastructure Act contained a requirement for firms with their registered office in Switzerland to report their derivatives trades to regulators. The most comparable regulatory requirement is EMIR reporting; indeed, UnaVista with its EMIR expertise partnered with the industry and SIX, the Swiss stock exchange, to construct the field requirements for Swiss reporting. However, there are number of differences between the two that mean it can be difficult for firms to easily meet both sets of requirements using in-house software. It is in this capacity that the UnaVista G20 Reporting product can assist, in enabling firms to easily and efficiently satisfy these and other reporting obligations using the same input files.”
The Financial Market Infrastructure Act (aka “FinfraG”) & The Financial Market Infrastructure Ordinance (aka “FinfraV”)
The reporting obligation is yet to begin. It will take effect following the date of authorisation of a trade repository by the Swiss Financial Market Supervisory Authority (FINMA). The dates after this upon which the reporting obligation will enter into effect shall be:
- 6 months after, for financial counterparties and central counterparties
- 9 months for small financial counterparties and non-financial counterparties
- 12 months for all other counterparties
Who is affected by the regulation?
Only counterparties who have a registered office is in Switzerland are required to report (as will their foreign branches), regardless of the instrument traded.
The reporting obligation is single-sided, and the reporting counterparty is chosen as follows:
- If the trade is cleared, the central counterparty must report, unless this central counterparty is ineligible for reporting (Highest priority for reporting)
- If the trade is un-cleared and between a financial counterparty and a non-financial counterparty, the financial counterparty reports
- If the trade is un-cleared and between two financial counterparties:
- The financial counterparty that isn’t small* reports (assuming 1 is not small)
- The seller reports, if the transaction is between two small or two non-small financial counterparties
- The counterparty which has its registered office in Switzerland (if one counterparty does)
- If the trade is un-cleared and between two non-financial counterparties, the same three criteria apply as for un-cleared trades between two financial counterparties. The only exception to this is that un-cleared trades between two small non-financial counterparties don’t need to be reported
*What defines a small counterparty?
Small counterparties are those whose rolling 30-day average gross position falls below the following levels:
- For financial counterparties, CHF 8 billion, evaluated at the financial or insurance group level.
- For non-financial counterparties, the threshold is evaluated for each asset class:
- Credit derivatives: CHF 1.1 billion;
- Equity derivatives: CHF 1.1 billion;
- Interest rate derivatives: CHF 3.3 billion;
- Currency derivatives: CHF 3.3 billion;
- Commodity derivatives and other derivatives: CHF 3.3 billion.
Which trades need to be reported?
Both over-the-counter and exchange-traded derivatives from the following asset classes need to be reported:
- Commodities (excluding electricity and gas derivatives trading on-exchange with only physical delivery as a settlement option, and also excluding freight, inflation, and climate derivatives)
FinfraG also makes an exemption for “other official economic statistics that are settled in cash only in the event of a default or other termination event”.
When is the deadline for reporting?
T+1, the day after the trade is executed, or the day after the trade is modified or terminated for lifecycle events. Valuations must be reported daily for outstanding trades and positions (apart from those conducted with small counterparties).