Recent Developments Regarding Exchange Trading - New Swiss Exchange Operating

On 26 June 1996 we reported in detail on the setting-up and operation of the new Swiss Exchange, designed to replace the split between the three main stock exchanges in Switzerland by introducing a single fully computerised trading system.

The project of the Swiss Exchange had to overcome a number of problems, most of them due to the newly developed complex computer software. After missing several scheduled dates, however, the Swiss exchange started trading in foreign shares on 8 December 1995, in domestic equities on 2 August 1996 and, finally, on 16 August 1996 the trading of bonds commenced.

Since 16 August 1996 the trading of both securities and derivatives in Switzerland is based - with one exception (see below) - on a single electronic trading system, operated by the Swiss Exchange.

Members of the Swiss Exchange must have an organisation meeting the standards currently set by the Swiss Federal Banking Statute and in the near future by the Swiss Federal Statute on Exchanges and Securities Dealings (expected partly to enter into force on 1 February 1997). The Rules of the Swiss Exchange provide for various technical requirements, requirements regarding settlement and personal ability regarding the traders, which must all be met in order to obtain an exchange license, i.e. permission to use the system.

It is to be noted that institutions domiciled abroad can also be admitted to the Swiss Exchange if, inter alia, they meet - by analogy - the requirements for membership applicable to members domiciled in Switzerland. Several foreign applicants have already been put on a waiting list.

The costs of the development of the Swiss Exchange have been about CHF 120 million. This amount, however, does not include the estimated sum of CHF 500 million, which the current 56 Swiss members had to invest for their individual programmes and trading systems linking themselves by special gateways to the Swiss Exchange.

Proposed Co-operation between SOFFEX, CBOE and OCC:

The above mentioned exception to trading on the new Swiss Exchange is standardised options and futures which will continue to be electronically traded on a separate computerised system, the Swiss Options and Financial Futures Exchange ("SOFFEX"). SOFFEX is a subsidiary wholly owned by the Swiss Exchange. It publicly announced on 6 September 1996 that it has signed a letter of intent with the Chicago Board Options Exchange (CBOE) and the Options Clearing Corporation (OCC). The parties intend to develop a common computerised system for the trade and settlement of standardised options and futures, which, at a latter stage, should lead to a completely new global trading system for standardised derivatives.

The content of this article is intended to provide general information on the subject matter and is not a legal advice. An individual matter requires legal advice according to the specific circumstances.