Swiss derivatives regulation back on track for equivalence
The Federal Council decided to amend the Financial Market Infrastructure Ordinance in order to align it with the EU regulation on OTC derivatives (EMIR). In particular, the rules regarding calculation of initial margins and haircuts have been adjusted to the respective EU law provisions.
Furthermore, the exemption of occupational pension schemes and investment foundations from the clearing duty has been extended by one year until 16 August 2018. Another extension of the transitional period has been introduced with regard to trading venue participants and securities dealers, whose reporting and disclosing requirements will enter into force on 1 October 2018.
Benefiting from substituted compliance
According to Article 13 EMIR, certain trades with OTC derivatives that involve an EU and a non-EU party may benefit from substituted compliance. This means that by complying with the third country regulations, the EMIR rules are considered as fulfilled. In order to benefit from this relaxation, the respective third country has to be declared equivalent by the EU Commission.
Value for intra-group transactions
This equivalence decision is of particular value for certain intra-group transactions. No such decision has been issued so far. However, since the respective rules in Switzerland (Financial Market Infrastructure Act and Ordinance) are well aligned with the ones in the EU, it is likely that Swiss market participants will be among the first ones to benefit from an equivalence decision.