Market Profiles

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For further information or support around accessing this market, please contact your RBC IS representative.

SIX Swiss Exchange
SIX Swiss Exchange is fully automated for trading in Equities, Bonds, Exchange Traded Funds, Exchange Traded Products, Sponsored Funds and Structured Products. It organises, operates and regulates key aspects of Switzerland's capital market. The commercial activities of the SIX Swiss Exchange cover the following business fields: cash market operations, information products, the development and operation of fully electronic trading platforms, and the admission of securities to trading on the Exchange. SIX Swiss Exchange also maintains the regulatory framework for securities issuance and trading as well as monitoring and enforcing compliance with these regulations through SIX Exchange Regulation AG.

SIX Digital Exchange (SDX)

SDX is the fully regulated, integrated issuance, trading, settlement, and custody infrastructure based on distributed ledger technology for digital securities and will support the digital evolution of non-bankable assets to facilitate their exchange and risk management. On September 10, 2021, the Swiss Financial Market Supervisory Authority FINMA has issued two approvals to operate financial market infrastructures based on so-called Distributed Ledger Technology (DLT). Specifically, FINMA has authorized SIX Digital Exchange AG to act as a central securities depository and the associated company SDX Trading AG to act as a stock exchange.

SIX Repo

As the key financial infrastructure provider for Switzerland, SIX operates the fully integrated, real-time multi-currency repo trading platform. The system is used by domestic and international clients ranging from regional and international banks to Swiss insurance firms and the Swiss National Bank.

Federal Department of Finance Activates Measure to Protect Swiss Stock Exchange Infrastructure
The equivalence of the Swiss securities markets granted by European Commission expired at the end of June 2019. As a contingency measure, the Swiss Federal Department of Finance decided to limit temporarily the trading of certain Swiss securities on the European Stock Exchanges from July 1, 2019, until an agreement is reached with the EU.

Due to this measure, the trading venues in the EU have lost recognition under Article 1 paragraph 3 of the ordinance (Ordinance on the Recognition of Foreign Trading Venues for the Trading of Equity Securities of Companies with Registered Office in Switzerland). Trading venues in the EU would be prohibited from offering or facilitating trading in certain shares of Swiss companies until further notice.

Following the recognition of Swiss stock exchange regulation by the UK, which came into force on February 3, 2021, FDF has lifted the restrictions on the UK in return. With the completion of this process, trading in Swiss shares on UK trading venues resumed.

With the SWXess Platform, SIX Swiss Exchange offers a fully automated trading platform on which supply and demand determine the prices of the financial instruments. 

The SIX Swiss Exchange thereby performs an important national economic task; which it can better fulfil the more liquidity it attracts. Network effects and economies of scale play a key role. The importance of network effects tends to focus trading on specific securities and segments. The technical and regulatory frameworks are of primary importance in this regard. 

Right from the start, the SWXess Platform was developed as a fully integrated trading system with direct STP links into the clearing and settlement system: when a trade is executed, the relevant settlement instructions are forwarded straight through to the CSD as a "locked-in" trade.

SIX Swiss Exchange (Monday to Friday):

• Bonds - CHF Swiss Confederation only: 08:30 - 17:00
• Bonds - Non CHF: 08:30 - 17:00
• Shares and Investment Funds: 09:00 - 17:40*
• Rights and Options: 09:15 - 17:15
• Structured Products: 09:15 - 17:15
• Bonds - CHF: 09:30 - 17:00
• Global Depository Receipts: 15:00 - 17:30*
• ETFs on Swiss Federal Bonds: 09:00 - 17:00
• ETFs, ETSFs and ETPs: 09:00 - 17:35**
• Sponsored Funds: 09:15 - 17:30**

• * a closing auction is conducted from 17:20 - 17:30; followed by Trading-At-Last from 17:30 - 17:40

  ** a closing auction is conducted from 17:30 - 17:35

ISIN: Yes
Other: Local Valoren numbers

The Swiss Financial Market Supervisory FINMA, as Switzerland’s independent financial-markets regulator, is mandated to supervise banks, insurance companies, exchanges, securities dealers, collective investment schemes, and their asset managers and fund management companies. Furthermore, FINMA regulates distributors and insurance intermediaries. FINMA is charged with protecting creditors, investors and policyholders and is responsible for ensuring an effective function of Switzerland’s financial markets.

For further information please see: https://www.finma.ch/en/finma/finma-an-overview/

Trading venue operators:

Trading venue operators such as stock exchanges and multilateral trading facilities (MTF) must establish and enforce their own organizational and trading regulations (art. 27 FMIA stating self-regulation). This includes, amongst others, regulations for monitoring trading. FINMA has the competence to monitor the respective regulations to be submitted to FINMA for approval.

https://www.admin.ch/opc/en/classified-compilation/20141779/index.html

For further information please see: https://www.finma.ch/en/supervision/financial-market-infrastructures/trading-venues/

Federal Department of Finance (FDF): 

The FDF deals with several topics including the federal budget, monetary and tax matters and providing services for the whole of the Federal Administration.

For further information please see: https://www.efd.admin.ch/efd/en/home.html

Swiss National Bank (SNB): .

The SNB, as an independent central bank, conducts Switzerland’s monetary policy. Its wide range of goals and responsibilities comprise, amongst others, price stability, implementation of monetary policy, cash supply and distribution, cashless payment transactions, stability of the financial system as well as international monetary cooperation.

For further information please see: https://www.snb.ch/en/iabout/snb/id/snb_tasks

Equities

• Ordinary and preferred shares: bearer or registered form. Swiss companies may decide to issue both types.
• Certificate of Participation: bearer form.
• SIX SIS eligible bearer shares are held in physical form in the SIX SIS vaults located in Olten. Registered shares are mostly dematerialised and are only printed at the request of the customer (one-way certificates with deferred printing).
• A debtor may issue uncertificated securities or replace fungible certificated securities or global certificates. Uncertificated securities are created by entry in the register and they only exist in accordance with the entry.
• Non-SIX SIS eligible securities: Single local and individual securities are not eligible for collective custody. Trade deliveries take place directly between the banks involved.

Debt

• Bonds: issued as uncertificated securities, jumbo certificate or as single certificate
• Government bonds are issued in uncertificated form only
• In general, debt securities are eligible for collective custody (SIX SIS eligible)

Extraordinary Situations
In effort to ensure fair and orderly trading to the greatest extent possible, the SIX Swiss Exchange may intervene by taking appropriate measures. 

Stop trading:
A significant divergence from the reference price in certain securities can lead to a so-called "stop trading", which results in either a postponed opening (delayed opening) or a trading halt. 

Example: the theoretical opening price of a security stands at CHF 86.25, i.e. a previously entered sell order would potentially match at that price with an existing order on the buy side. But because the implied execution price deviates too greatly from the reference price (e.g. CHF 91.35, equivalent to a 5.6 % variation), there will be a delayed opening. 

In addition to the examination of whether the potential follow-up price lies within the defined Stop Trading range (depending on security), there is also a time span set on any such percentage fluctuation. A Stop Trading will also be triggered if the predefined price threshold is exceeded within the time span of ten seconds. The goal of this additional Stop Trading parameter is to protect all securities from massive price declines. 

Suspension of trading:
Trading may be temporarily suspended in individual issues or entire market segments. For the securities involved, no opening or continual trading will take place (In unusual circumstances, or if the issuer breaches important disclosure requirements, the Admission Board may temporarily suspend the trading of a security. Such a suspension may also occur as a sanction). 

Handling of mistrades:
Under certain circumstances, SIX Swiss Exchange may investigate a transaction executed by the Exchange system and, if necessary, declare the trade null and void. In the case of an execution that deviates considerably from the going market price and is thus at conflict with the principle of fair and orderly trading, SIX Swiss Exchange has the right to intervene and nullify the trade.

AED, ARS, AUD, BAM, BGN, BRL, CAD, CHF, CNY, COP, CZK, DKK, EGP, EUR, GBP, HKD, HRK, HUF, IDR, ILS, INR, ISK, JPY, KRW, KZT, LTL, LVL, MXN, MYR, NOK, NZD, PEN, PHP, PLN, QAR, RON, RSD, RUB, SAR, SEK, SGD, THB, TRY, TWD, UAH, USD, VND & ZAR

There is an active over-the-counter market which trades listed equities, bonds etc. as well as unlisted securities and synthetic instruments (e.g. convertible money market units, index-linked call or put warrants). It is mandatory for banks and brokers to report all over-the-counter trading of SIX Swiss Exchange listed securities. 

Trading hours: Monday to Friday: Normal SIX Swiss Exchange trading hours

OTC Transaction:

On-exchange as well as off-exchange transactions are being processed through SECOM, the settlement platform of SIX SIS Ltd, the Swiss CSD or through T2S. The interlinking of SIX Interbank Clearing Ltd. (cash) and SIX SIS (CSD) for OTC transactions and additionally SIX x-clear, SIX Swiss exchange in the case of on-exchange transactions build the Swiss value chain. 
Since June 21, 2015, there is a direct link to T2S, the pan-European Settlement Platform. Securities settling in EUR for which SIX SIS is the issuer CSD may use the T2S platform. Settlement in EUR for which SIX SIS is the issuer CSD can still settle in SECOM. Switzerland is therefore using two settlement platforms, SECOM and T2S. 

On Exchange Transactions: 
The trades concluded in SIX Swiss Exchange are immediately matched in real-time and are acknowledged to the trading parties. At the same time, the trade details are forwarded real-time and online to the SECOM or T2S system as "locked-in trades". SECOM or T2S acknowledges receipt of the trade details to SIX Swiss Exchange and automatically generates the delivery and payment instruction. This is immediately confirmed to the two trading parties with both receiving an "accepted/matched" status from SECOM or T2S within seconds of the transaction being completed. Securities and cash settlement are then made on the value date.

OTC Transactions: 
Off-exchange settlement instructions are input by the local custodians. Acknowledgement of receipt is sent immediately by the CSD after the settlement instruction has reached the SECOM or T2S system. Any status update on a transaction is reported immediately by the CSD. OTC-trades that have not matched yet can be cancelled by one of the two settlement parties. Matched trades in SECOM and T2S have to be bilaterally cancelled. 

General: 
Each separate securities transaction is settled in real-time, on a trade-by-trade basis. (RTGS). Every matched securities transaction stored in the SECOM or T2S database is forwarded for settlement on the value date, as an individual transaction in line with the FIFO principle (First In, First Out). As a result, the seller's securities position is verified and the necessary securities reserved.

The associated payment instruction is electronically forwarded real-time by SECOM or T2S via SIX SIS to SIX Interbank Clearing whereupon SIX Interbank Clearing (SIC) immediately checks whether the buyer has sufficient cash to cover the trade. If there is adequate cover, SIC debits the amount from the buyer's account and sends a final settlement advice to SECOM or T2S, which then debits the securities to the seller and credits them to the buyer. Both transactions are final. This system of securities transactions can thus be described as Simultaneous, Final and Irrevocable Delivery Versus Payment - SFIDVP. The buyer can immediately dispose of the securities while the seller has instant access to the cash from the sale.

Registration is not included on this model as registration does not affect settlement of a trade.

In Switzerland, short sales are generally not forbidden. However, certain short sales are prohibited. In terms of the securities trades on SIX Swiss Exchange in Zurich, the prohibition applies only to so-called "naked short sales". That means it's applicable only to transactions that are not covered by a corresponding hypothecation of securities (uncovered transactions).

Same-day turnarounds are common practice in the Swiss market.

SIX x-clear Ltd - is part of SIX Group, the integrated Swiss financial market infrastructure provider. As Central Counterparty (CCP) SIX x-clear offers clearing and risk management services in the cash-equity and bond markets.

SIX SIS Ltd - is the exclusive Swiss depository with respect to equities, bonds, government securities and funds. SIX SIS acts in a dual role as the sole Swiss and international CSD.

The use of SIX SIS for safekeeping is not legally compulsory but is common market practice. Government bonds, T-bills, corporate bonds, shares, investment funds, warrants and bank-issued medium-term notes are held at SIX SIS.

BIS is an international organisation which fosters cooperation among central banks and other agencies in pursuit of monetary and financial stability. The Committee on Payments and Market Infrastructures (CPMI) uses three common structural approaches, or models, to categorise the links between delivery and payment in a securities settlement system.

BIS Model 1 - Systems that settle transfer instructions for both securities and funds on a trade by trade (gross) basis, with final (unconditional) transfer of securities from the seller to the buyer (delivery) occurring at the same time as final transfer of funds from the buyer to the seller (payment).

BIS Model 2 - Systems that settle securities transfer instructions on a gross basis, with final transfer of securities from the seller to the buyer (delivery) occurring throughout the processing cycle, but settle funds transfer on a net basis, with final transfer of funds from the buyer to the seller (payment) occurring at the end of the processing cycle.

BIS Model 3 - Systems that settle transfer instructions for both securities and funds on a net basis, with final transfers of both securities and funds occurring at the end of the processing cycle.

Book-Entry: Positions of registered shares are held in aggregate by SIX SIS in the subcustodian's account. Individual client records are maintained by the subcustodian. The registration of securities is not mandatory in the Swiss market. Therefore, registered shares received / transferred between counterparties in the Swiss market are not automatically registered. They are held in "Dispo" form since registered shares are exchanged between agents through SIX SIS on a system of one-way certificates (de-materialized) with deferred printing. Since 2010 dematerialized shares have been regulated by law. Because of this an increasing number of Swiss companies do no longer issue physical shares.

Physical: Certificates of unlisted companies are reregistered by the issuing company, typically in the name of the beneficial owner. Registration may take up to 40 business days (or exceptionally even more) depending on the company. Unlisted companies can allow up to 90 days in order to approve a registration. Companies have discretion under their articles of incorporation to limit the number of shares registered to one owner. The buyer's name must be disclosed, otherwise no registration will take place and no certificate will be issued.

Only a few listed companies do still issue physical certificates. The buyer's name must also be disclosed in order to issue a physical certificate. Registration and issuing of the physical certificate may take up to 20 business days.

The following registration entries are possible:

• registration in the name of beneficial owner (holding shares in his/her name and for his/her account)
• registration in the name of a nominee  (holding shares in its name, but for the account of a client, if accepted by the issuer/company)
• "Static disposable holding" (unregistered registered shares without voting rights)
• “Dispo SIX SIS Nominee”  unregistered registered shares but with restricted notification duty towards the company.

The registration process for SMI shares usually takes about three to five days. Registration for other listed securities may take up to 20 business days, depending on the company. Unlisted companies can allow up to 90 days in order to approve a registration.During that period, securities are not blocked and can be sold or delivered between counterparties.

Shareholdings in the Swiss market may be required to be disclosed by the beneficial owner, particularly when such shareholdings reach, exceed or fall below prescribed disclosure limits. Investors must ensure that they comply in full by reporting such holdings to the appropriate organizations (and in relation to the disclosure limits that are mentioned in the Federal Act on Financial Market Infrastructure and Market Conduct in Securities and Derivative Trading (Financial Market Infrastructure Act FMIA), within the timeframe required. If you have any questions regarding this issue we encourage you to consult your legal counsel. Failure to comply with the reporting requirements in the Swiss market may lead to penalties and/or other sanctions.

The notification requirement according to Art 120 FMIA (effective January 2016) is as follows:

• Anyone who directly or indirectly or acting in concert with third parties acquires or disposes shares or acquisition or sale rights relating to shares of a company with its registered office in Switzerland whose equity securities are listed in whole or in part in Switzerland, or of a company with its registered office abroad whose equity securities are mainly listed in whole or in part in Switzerland, and thereby reaches, falls below or exceeds the thresholds of 3%, 5%, 10%, 15%, 20%, 25%, 33 1/3%, 50% or 66 2/3% of the voting rights, whether exercisable or not, must notify this to the company and to the stock exchanges on which the equity securities are listed.
• Financial intermediaries who acquire or dispose shares or acquisition or sale rights on behalf of third parties are not subject to any notification duty in accordance with paragraph 1.
• Anyone who has the discretionary power to exercise the voting rights associated with equity securities in accordance with paragraph 1 is also subject to the notification duty. It should be noted that this would include for example an asset manager.
• The following shall be deemed equivalent to an acquisition or disposal:
  1. the initial listing of equity securities;
  2. the conversion of participation certificates or profit-sharing certificates into shares;
  3. the exercise of conversion or acquisition rights;
  4. changes in the share capital; and
  5. the exercise of sale rights.
• All procedures that can ultimately confer the voting right to equity securities also constitute an indirect acquisition . This does not apply in the case of powers of attorney granted solely for the purposes of representation at a general meeting.

In addition, among other legal provisions, disclosure of shareholder can be required by an issuer in order to grant voting rights. Furthermore, Swiss companies can implement certain disclosure requirements in their bylaws in connection with the acquisition and transferability of shares.

Please further note that the provisions relating to the Swiss Code of Obligations, the Collective Investment Schemes Act and the Swiss Federal Act on Intermediated Securities which were revised in 2012 and relate to the implementation of the recommendations put forward by the Financial Action Task Force (FATF) entered into force on July 1, 2015. The FATF sets out a number of new disclosure and transparency obligations for non­listed Swiss companies, which have their registered office in Switzerland, and their equity holders. For example, the buyers and/or holders ("owners") of such companies are now subject to new reporting requirements (see the new articles 697i, 697m, and 697j of the Swiss Code of Obligations, among others):
https://www.admin.ch/opc/en/classified-compilation/19110009/index.html

Effective November 1, 2012, the European Union (EU) Short Selling Regulation requires any Central Counterparty (CCP) in the EU to impose fines on late deliveries and a strict buy-in regime to ensure the delivery of securities. The Swiss CCP (SIX x-clear) implemented similar rules.

Late Settlement
A late settlement fee will be applied per day and per settlement for trading venue transactions with a Central Counterparty (CCP) which cannot settle on value date due to a lack of securities to be delivered. The fee will apply until the transaction can be settled.

For exchange traded funds (ETFs), a fixed fee of CHF 50.00 will be charged, i.e. the minimum fee of CHF 100.00 does not apply for this asset class.

For settlement amounts over CHF 50 m, both of the levels below must be passed through, i.e. the part up to CHF 50 m will be calculated using the higher and the rest with the lower rate. A minimum amount is calculated per settlement and per day.

The existing late settlement fee will be applied to all existing trading venues in which Six x-clear operates as CCP. 

The CCP may attempt to borrow securities to cover a lack of securities and charge related costs to its clients.

CSDR Settlement Discipline Regime:

The Settlement Discipline Regime (SDR) regulations form part of the wide-ranging EU regulation on central securities depositories (CSD Regulation, CSDR) and aims to increase settlement efficiency in the EU markets. SDR does not apply to the Swiss market for SIX SIS Inhouse settlements. However, SDR applies to cross-border settlements between SIX SIS and EU markets.

Buy-In

The buy-in notification for the Swiss market will be made on the Intended Settlement Date (ISD)+4 and executed ISD+5 16:00 CET.

Six x-clear will charge an administration fee of CHF 150 for every buy-in and Late Matching buy-in fee of CHF 300.

The costs for the buy-in, including any third party fees, will be charged to the failing party separately when they occur.

Major subcustodian banks and the central securities depository (CSD) offer securities lending and borrowing facilities; SLB transactions of Swiss securities are usually settled as OTC trades wherein SIX SIS acts as the CSD and settlement institution for financial instruments. Foreign investors may participate in Swiss securities lending and borrowing without any restrictions.

Naked short sales are not permitted and not compatible with the requirements of the FINMA-Circular regarding Market Behaviours Rules. Such naked short sales generally are forbidden. Banks must make sure that, when selling securities for clients, the clients are able to deliver the securities on settlement date.

Settlement: In the case of late settlement,  it's each beneficial owner's own duty to claim the failing party for any lost interests.

Under the Swiss Criminal Code money laundering is defined as any act "that is aimed at frustrating the identification of the origin, the tracing or the confiscation of assets which, as the perpetrator knows or must assume, originate from a felony" (Art. 305bis SCC). This includes any act which conceals or disguises assets of criminal origin or assets that have been obtained through serious crime. The perpetrator's aim is to give the impression that the funds have been obtained legally. This act of disguise occurs in the legal financial market through all sorts of investment activities. The originally "dirty" money is thus "laundered" and can enter normal circulation within legal trading circles.

Combating money laundering is an important part of the overall fight to thwart drug dealing, organised crime and, since a number of years, also against terrorist financing. The extensive data that is required to be collected and stored for the purpose of combating and prosecuting money laundering, has proven useful for investigations into terrorist activities; for this reason, the original regulations governing the fight against money laundering are also applied today, in a slightly adapted form, in countering terrorist financing. In the international context, the terms AML/CFT Regulations (Anti-Money Laundering / Countering the Financing of Terrorism) have therefore emerged becoming the current technical term among experts.

As the laundering of money most often takes place in another country compared to where the predicate offence was committed, it is important that the fight against money laundering is internationally coordinated in order to close loopholes, as far as possible, in regulations or in criminal prosecution law. This requires national regulations that are comparable and consistent with each other. In order to achieve this, international, multilateral standards have been drawn up to provide the foundation for national regulations.

As a member of FATF, Switzerland too, has made a commitment to comply with the 49 Recommendations. The Swiss system for combating money laundering and terrorist financing has thus been influenced by these standards.

The objectives of the Swiss system for combating money laundering include protecting Switzerland's integrity and reputation as a financial centre and ensuring the fair fulfilment of the centre’s economic functions (protection of its reputation and functions). It is not aimed at consumer protection.

The cornerstone of the preventive side of the fight against money laundering is formed by the Federal Act on Combating Money Laundering in the Financial Sector (Anti-Money Laundering Act, AMLA) and the implementing regulations relating to it, which form part of administrative law and which govern the Swiss system of supervision with respect to combating money laundering.

Within the framework of criminal prosecution of money laundering and terrorist financing, the following provisions from the Swiss Criminal Code (SCC) are of the most relevance:

1.Art. 305bis SCC (English translation): Money Laundering

2.Art. 305ter SCC (English translation): Insufficient Diligence in Financial Transactions and Right to Report

3.Art. 260ter SCC (English translation): Criminal Organisations

4.Art. 260quinquies SCC (English translation): Financing Terrorism

5.Art. 69 to 72 SCC (English translation): Confiscation

6.Art. 102 and 102a SCC (English translation): Corporate Criminal Responsibility.

Further important elements are provided by national and international mutual legal assistance in criminal matters and administrative assistance.

None

There are basically no statutory requirements regarding foreign ownership with the exceptions of:

• The Swiss Banking Act prohibits a foreign bank or a foreign controlling corporation from holding a majority interest in a Swiss bank unless the Swiss bank has reciprocal rights in the country of residence of the foreign company or the foreign controlling corporation.
• Other federal acts (Flight Traffic Act, Pipeline Act and Nuclear Act) include foreign participation restrictions and require permission to be sought on the composition of the shareholders of certain companies.
• The "Lex Koller" (which restricts foreign ownership of Swiss property and land) applies to share purchases when more than 33.3% of a company's real net worth is in Swiss real estate. This law affects very few listed companies.

Certain companies have however set ownership limits according to their articles of incorporation.

Collective investment schemes are open to all investors, except where the Federal Act on Collective Investment Schemes (CISA), the fund regulations or the articles of association restrict investor eligibility to qualified investors.

There are no regulations imposed by the Swiss National Bank.

Since March 31, 2009, all companies operating on foreign exchange market are required to obtain a full banking license.  and a minimum capital of CHF 20 million is required.

There is only one clearing system in Switzerland, SIX Interbank Clearing, which has been in operation since June 1987. It is a true Real Time Gross Settlement (RTGS) system and is based on a centralised computer system at SIX Interbank Clearing with an on-line connection to the participating banks. Payments to postal accounts or electronic payments from postal accounts to bank customers are also transacted via the SIX Interbank Clearing network. The banks can submit and receive payments around the clock on banking days.

Structure:
The participating financial institution holds a settlement account (Giro) with SIC that is balanced on a daily basis with the use of a transfer account at the Swiss National Bank (SNB). As the supervising entity of SIC, the SNB verifies the cover-funds of any and all financial institutions (optional) and if necessary, provide a participant with the required funds or grant appropriate credits.

Process:
Payments may be delivered online 24 hours and verification is made according to the following data:

• Payment structure
• Electronic signature
• Input authorisation according to master data file
• Double entry verification/control.

According to the above quoted verifications, confirmation or error messages are generated and forwarded to the ordering financial institution. Upon verification of available funds, payments are settled irrevocably and forwarded to the recipient institution, which again generates and returns an electronic receipt. In the event that the ordering institution does not have the necessary liquidity available, the payment is forwarded to a ‘waiting queue' pending appropriate funds.

Security:
SIX Interbank Clearing ensures that secure, confidential transmissions of all transaction are granted with the so called IBASEC (Interbank Security) component. Together with its unique and state-of-the-art hardware and software combinations, IBASEC meets the following requirements:

• Sending and receiving of a message is recorded
• Messages are transmitted unadulterated
• The sender of any message is clearly identified
• Messages cannot be intercepted.

In 1999, SIX Financial Information (formerly SIX Telekurs) launched the Euro Swiss Inter-bank Clearing (euroSIC), a clearing system for EUR payments in Switzerland and abroad. euroSIC is a real-time gross settlement system. On February 27, 1998, Telekurs Holding AG (40%) in partnership with Credit Suisse Group (30%) and UBS AG (30%) founded SECB Swiss Euro Clearing Bank GmbH, Germany (SECB), to provide the Swiss financial entities with a direct access to the European payment systems. This was in effect when SECB became a member of the German clearing system, RTGS plus, the German access point to TARGET.

Both SIX Interbank Clearing and euroSIC are linked to the securities settlement system of SIX SIS.

Permitted in the market.

Typically, Swiss companies pay a cash dividend. A very small number of companies still provide ‘dividends in kind' to their shareholders, e.g. mountain railways that distribute vouchers. Dividends are usually paid once a year, the majority between March and June. They are usually announced between eight to 60 days prior to pay-date (this can vary from company to company).

There are usually between four and nine days between the annual general meeting and the dividend payment date. This, however, is not a set rule and it can vary from company to company.

Swiss market practice stipulates that the determining of entitlements takes place on record date end-of-day, i.e. one working day after the ex-date. You are entitled to a dividend if the trade date of your position is before the ex-date.

In practice, entitlement is paid initially on the settled securities position from close of business on record day. 

Market Claim process is defined as the process for reallocating the proceeds of a distribution so that they reach the contractually entitled party if he/she has not received full entitlement on record date. Market Claim detection applies to all matched but neither settled nor cancelled transactions.

The record date is one working day after the ex date , the pay-date is as close to record date as possible, preferably the next working day.

Basically annual.

Interest on Swiss debt instruments is paid either annually or semi-annually.

Basically on a 30/360-day basis (possible exceptions: floating rate notes or derivative instruments; please consult the terms and conditions of these products).

Effective October 26, 2015, the corporate action events with subscription rights / shareholder rights shall be processed as follows:

• Settlement cycle T+2 on the first trading day;
• Settlement cycle T+1 from the second trading day.

Corporate actions are announced by the lead manager, in the SIX Swiss Exchange bulletin, in advertisements in local newspapers, by SIX Financial Information, Reuters, Bloomberg and on the company's website.

For all Swiss securities except bonds, the determining of entitled positions takes place on record date end-of-day, i.e. one working day after the ex-date. Eligibility for entitlement is still determined based on the trade date of the deliveries for transactions. All positions acquired before ex-date are eligible to receive entitlements, regardless of whether or not transactions have settled on record date. The trade date is a matching criterion in the CSD and must be entered for all transactions.

Shareholders are paid on pay-date according to their settled holdings as at close of business on record date. 

The Market Claim process is defined as the process to reallocate the proceeds of a distribution (Cash and securities) to the contractually entitled party. In context of the Swiss market this applies to all pending transactions (matched but neither settled nor cancelled) on record date. Claim detection will be initiated on end-of-day of the record date of the distribution. The claim detection is automatically initiated by SIX SIS for 20 business days past the record date (Market Claim Detection Period). Market Claims are raised on either pay date (beginning of day) or after pay date if eligible transactions (where Trade Date is smaller to ex date) match during the claim detection period. In the latter instance, the Market Claims are raised immediately.

Market Claims have a settlement period of 20 business days (SECOM and T2S). Should a Market Claim not have settled on the 21st business day after its generation SIX SIS will automatically cancel the Market Claim (in SECOM) or send a cancellation request (in T2S).

The claim settlement period can maximally add up to 40 business days (for market claims that have been raised at the end of the claim detection period [business day 20] and which settle at the end of the settlement period [an additional 20 business days]).

Since 22 June 2015 when this process has been put in place (EU Harmonization), Market Claim notification is provided by SWIFT MT548 with “CLAI”. Settlement of a Market Claim is advised by SWIFT MT566.

The determining of entitled positions for bonds is unchanged by the introduction of the record date on November 23, 2009 and takes place on ex-date based on the settled positions as of ex-date minus one end-of-day. Eligibility for entitlement is based on the value date of transactions.

Short positions
In the case of a short position on ex-date, 100% of the manufactured dividend will be debited to the client, whereas the local custodian will deliver 35% (equivalent of the amount of withholding tax) directly to the Swiss Federal Tax Administration. If short position remains, subcustodian will then debit the mentioned additional 35% corresponding to the Swiss withholding tax. This debit will usually take place within 60 days of the pay-date. Short positions may be caused by short sales, lending transactions, deliveries or transfers between internal accounts.

Capital Contribution Principle

On January 1, 2011, Switzerland introduced the capital contribution principle, which replaced the nominal value principle, as part of the Swiss Corporate Tax Reform II. According to the nominal value principle, which was applied until the end of 2010, the repayment of nominal share capital was tax exempt for Swiss income and withholding tax purposes. On the other hand, the repayment of capital contributions (APIC) to shareholders qualified as dividends and were subject to Swiss income and withholding tax, when repaid to the shareholders. With the new regulations, Swiss companies are able to repay free of withholding tax not only the share capital but also additional paid-in capital and other contributions to the reserves made by the shareholders after December 31, 1996.

CCP will be restricted from January 1, 2020 due to the adoption of the Federal Act on Tax Reform and AHV Financing (TRAF). As one of the restrictions, a Swiss listed company has to distribute the same amount of dividends (tax-free) from capital contribution reserves (CCR) as dividends (taxable) from from other reserves (e.g. retained earnings). This obligation is subject to the availability of such other reserves. If the company fails to comply, half of the dividend amount will be deducted from other reserves for tax purposes and will be subject to Swiss withholding tax.

Swiss market practice stipulates that entitlements are calculated based on the eligible holding on record date end-of-day (except bonds). 

The Swiss market offers only a manual Buyer Protection in its corporate action processes. There is no facilitation by the market infrastructure (SIX SIS AG) in respect to the exchange of Buyer Protection instructions. Counterparties have to agree bilaterally if and how a buyer who has yet to receive the underlying securities of an elective corporate action will receive the Corporate Actions results of choice.

On transactions that still have not settled by the buyer protection date, the buyer needs to initiate the buyer protection with the seller directly. On the buyer protection deadline any unsettled trades should be cancelled by both the buyer and the seller and reinstructed according to the choice of the buyer through the buyer protection.

The buyer Protection deadline (i.e. last day and time by which a Buyer Protection instruction can be given) should follow the guaranteed participation date (GUPA) for a settlement cycle. The creation of a buyer protection instruction is possible until close of settlement of the date of the buyer protection deadline. The buyer protection deadline should be at least one business day before the market deadline.

Basically, there are no restrictions on foreign investors (exceptions are found in the real estate business – Lex Koller). Therefore articles of association of real estate companies may include some restrictions in regard to maximum of voting rights that may be held by foreign investors. Other than that, foreign investors are not discriminated against local investors. Issuers may exclude nominee registered shares from voting and require the beneficial owner to register with the issuer. Furthermore, listed issuers may only limit the maximum of voting rights per investor (group) in the articles of association. Issuers of non-listed securities may impose further restrictions, also referred to as Vinkulierung.

The Vinkulierung mechanism allows the board or the management to refuse buyers of shares (e.g. foreign investors) the entry into the share registry and thereby prevents them from exercising voting rights.

For illustration please refer to the below example.

Nominee restrictions
An important consideration in the Swiss Market is the fact that holding registered shares does not guarantee the right to vote. As a general rule, ownership will only secure the pecuniary rights of a registered share owner, i.e. the income entitlement and any capital appreciation. Exercising one's participation rights, i.e. the right to vote is entirely dependent  on  registration in the shareholder register. Some Swiss companies may restrict or may refuse to grant and accept voting instructions from positions registered in a nominee name. Issuers may require the signing of a nominee agreement prior to granting voting and/or registration rights.

Many Swiss companies accept registration in nominee names but do not grant voting rights or they limit nominee registration to a maximum % of outstanding shares. Beyond this limit, further registration may be refused or voting rights may not be granted. The limit can vary from issuer to issuer.

If shares are registered in a nominee name without voting rights it would be necessary to re-register the shares in the beneficial owner's name before the company closes the share-register for the upcoming general meeting.

Holders of both registered shares and bearer shares have the right to attend and to vote at the AGM. While holders of bearer shares must contact their subcustodian bank for admission and voting cards, registered holders of registered shares are invited directly by the company via mail. 

After receipt of voting instructions, most of the Swiss subcustodian banks block the positions of bearer shares. These shares become freely available the business day after the AGM / EGM. However, the positions of registered shares remain unblocked as the share registrar is obliged to control the voting rights. 

It is possible to withdraw a voting instruction until at least two business days before the company's deadline, however this requires receipt of "voting withdrawal" instructions via SWIFT that will be forwarded to the company (this applies also for the unblocking of bearer shares which afterwards are freely tradable again).

Companies must publish the official agenda of annual general meetings (AGMs) and extraordinary general meetings (EGMs) at least 20 days before the AGM/EGM. The company's announcement may be in different Swiss official languages (German French and Italian and occasionally in English).

There is no legal obligation to actively inform the shareholders or the public about the meeting results. However, usually the companies publish the results on their website, one day after the meeting.

On request, subject to availability, but only available in German, French or Italian and occasionally in English.

A popular choice for managing the voting process is the nomination of a Proxy Agent. By appointing a Proxy Agent, the shareholder can ensure participation in the voting process without having to personally take action for each AGM. In the event that a shareholder wishes to vote by proxy they will need to provide a limited Power of Attorney to the custodian, stipulating that the proxy provider is entitled to receive information and submit voting instructions on their behalf. 

It must be noted that there is no guarantee or legal obligation that Swiss companies will or must accept votes cast by a proxy: Swiss domiciled companies reserve the right to refuse voting instructions issued by a proxy and / or may request additional information pertaining to the shareholder issuing the voting instruction.

There are various instructing options for the shareholder:

• Submits voting instructions in writing to the company registered shares only.
• Submits voting instructions in writing to the subcustodian bank (bearer shares and registered shares).
• Attends in person (holders of bearer shares must contact their subcustodian bank for admission and voting cards).
• Appoints an "Independent Counsel" to vote (bearer and registered shares).

Partial or split voting instructions are possible. 

The vast majority of the Swiss companies do not require quorums: The AGM may pass resolutions regardless of the number of shareholders that attend the meeting or that are represented by proxy. (Exceptions for example are "Zuger Kantonalbank" and "Pax-Anlage AG": they require that at least 50% of the share capital is represented, otherwise the meeting will be postponed for no more than four weeks.)

Swiss law requires that a general meeting of shareholders must be held annually, within six months after the close of the business year.

35% withholding tax at source (treaty rate is 15% for most countries, see Swiss Treaty Rates Table in attachment).

On January 1, 2011, Switzerland introduced the capital contribution principle, which replaced the nominal value principle, as part of the Swiss Corporate Tax Reform II. According to the nominal value principle, which was applied until the end of 2010, the repayment of nominal share capital
was tax-exempt for Swiss income and withholding tax purposes. However, the repayment of capital contributions to shareholders qualified as dividends and was therefore subject to Swiss income and withholding tax when repaid to the shareholders.

With the new regulations, Swiss companies are able to repay free of withholding tax not only the share capital but also additional paid-in capital and other contributions to the reserves made by the shareholders after December 31, 1996. In addition, such repayments of reserves from capital contributions are exempt from income taxation for Swiss resident individuals holding their shares as private assets. However, such capital contribution reserves must be notified to and approved by the Swiss Federal Tax Administration in order to qualify for tax free repayment. If the respective formalities are not in place, the repayment would still be subject to Swiss withholding and (for Swiss resident private investors) income tax.

Impact on foreign investors:

The new rules are relevant for foreign shareholders of a Swiss resident quoted company. The repayment of equity can now be made through a withholding tax-free repayment of previously contributed share premium, rather than dividends which remain subject to 35% withholding tax.

Impact on Swiss resident investors:

Under the new regulation, Swiss resident individuals holding investments as private assets are no longer subject to income tax on the repayment of capital contributions by a company. This also applies if the individuals have not themselves paid in such capital contribution.

Details on the application of the capital contribution principle and the transition from the nominal value principle have been published in the Swiss Federal Tax Administration Circular Letter 29a issued September 9, 2015 (available only in German, French and Italian). This document contains specific information pertaining to the interpretation of the new rules and outlines the bookkeeping and administrative requirements, which need to be fulfilled if a company wants to benefit from the new system.

Transitional rules:

Only share premium contributions and other contributions made after December 31, 1996 qualify as income tax-free and withholding tax-free repayable capital contribution. Based on the Swiss Federal Tax Administration Circular Letter 29a, such capital contributions must be separately accounted for in the company’s statutory accounts as reserves from capital contributions in the business year that ends in 2011.

New restrictions of the Capital Contribution Principle

CCP are restricted since January 1, 2020 due to the adoption of the Federal Act on Tax Reform and AHV Financing (TRAF). As one of the restrictions, a Swiss listed company has to distribute the same amount of dividends (tax-free) from capital contribution reserves (CCR) as dividends (taxable) from other reserves (e.g. retained earnings). This obligation is subject to the availability of such other reserves. If the company fails to comply, half of the dividend amount will be deducted from other reserves for tax purposes and will be subject to Swiss withholding tax.

Furthermore, restrictions under the new rule apply to share buy-backs. Shares repurchased by Swiss listed companies for cancellation are required to lower their capital contribution reserves by at least 50% of the difference between the buyback price and the nominal value of the shares. The Swiss Federal Tax Administration has published Circular Letter 29b to reflect these changes.

In December 2022, the Swiss Federal Tax Administration published an amended version of Circular Letter 29 (version c), reflecting the tax impact of the newest legal developments regarding the so-called capital band (Kapitalband) and the possibility to denominate the share capital in a foreign currency.

Relief at source:
No relief at source is possible. As an exception tax relief at source may be obtained for investors residing abroad invested in certain Swiss domiciled collective investment funds, where more than 80% of the fund's income is derived from sources outside Switzerland, by filing an Affidavit ("banker's declaration"). 

SNB Bills:
Based on certain provisions, the SNB or domestic banks can make repayments, without deducting withholding tax, to other domestic banks. An exempted payment to foreign banks, according to foreign bank legislation, is also possible if they confirm holding the SNB Bills for their own account. 

Revised Withholding tax act in force from January 2013:
Interest paid on contingent convertible bonds (CoCos) of systemically important banks and on write-down bonds are exempt from withholding tax as of January 1, 2013. In order to be exempt from withholding tax, the bonds must meet the relevant conditions under supervisory law and have been explicitly approved by the Swiss Financial Market Supervisory Authority for counting towards the capital requirements. Withholding tax exemption for CoCos and write-down bonds will be restricted to bonds issued between 2013 and 2021.
A similar exemption was also established for bail-in bonds in 2016. The exemptions came into effect on January 1, 2017 and are limited to a five-year period. Furthermore, not only bail-in bonds issued by a Swiss domiciled Group’s top holding company but also issued by the individual Swiss domiciled Group companies may benefit from this new exemption from Swiss withholding tax.

In 2021 Swiss Parliament approved the bill to extend the exemption from withholding tax for TBTF instruments from 2022 until end of 2026. The optional referendum was not taken, the extension came into effect on 1 January 2022.

Tax Vouchers:
Foreign banks and custodians have to issue their safekeeping account clients who are credited with income from Swiss securities with a tax voucher in addition to the usual statements of income. A tax voucher constitutes an explicit confirmation from the foreign bank or custodian that no additional dividends have been generated on the basis of short positions. If an income statement (deduction certificate) and/or a tax statement are issued by a foreign bank or custodian, clients must attach a tax voucher to any application for reimbursement. The fact that a tax voucher has been issued by a foreign bank does not in itself grant the right for reimbursement.

35% withholding tax at source (see above treaty rate is 10% for most countries, see Swiss Treaty Rates Table in attachment).

There is no capital gains tax in Switzerland levied upfront.

A Swiss transfer stamp duty applies on the transfer of legal ownership in a taxable security (e.g. shares, bonds, fund units) against remuneration, if a Swiss securities dealer is involved in the transaction and no exemption applies. The following tax rates are applicable:

• 15% tax on domestic (i.e. CH and LIE) securities, in this case half of the stamp duty of 0.075% is allocated to each counterparty, as long as they are not exempt from Swiss transfer stamp duty as per Swiss stamp duty law (Art. 17a, Art. 19 or Art. 19a)
• 3% on foreign securities, i.e. 0.15% of the remuneration is allocated to both counterparties, as long as they are not exempt from Swiss transfer stamp duty as per Swiss stamp duty law (Art. 17a, Art. 19 or 19a)

Foreign investors may be subject to transfer stamp duty (in general debited by the Swiss securities dealer), depending on their investor category, at the time they trade securities.

However, please note that there are some exceptions available related to the status of the investor, the nature of the traded security or the transaction type:

1. Some investors are exempt from Swiss transfer stamp duty. These are basically:

• Swiss domestic investment funds (as per article 7 of the investment funds law)
• Foreign investment funds (as per article 119 of the investment funds law)
• Foreign governments or governmental agencies and central banks (as per 2.7.1 note 36 and 37 of “Circular Nr. 12”)
• Foreign social security institutions (as per 2.7.1 note 38 of “Circular Nr. 12”)
• Foreign pension funds (as per 2.7.1 note 39 of “Circular Nr. 12”)
• Foreign life insurance companies (as per 2.7.1 note 40 of “Circular Nr. 12”)
• Foreign domiciled corporations, whose shares are listed on a recognized stock exchange (including their consolidated foreign subsidiaries)
• Organizations established for the purpose of ensuring tax compliance according to Art. 19a of the Swiss stamp duty law

If a foreign bank, a foreign stock exchange broker or a Central Counterparty CCP is involved in the conclusion of a transaction, the transfer stamp duty portion pertaining to aforementioned party shall not apply.

Therefore also foreign investors may be subject to transfer stamp duty, depending on their investor category, at the time they sell or purchase securities in the market.

2. There are products on which no Swiss transfer stamp duty is due, e.g. bonds with a tenor not exceeding 1 year (money market bonds), warrants/futures/options, purchase rights.
3. In addition, some types of trades (e.g. new issues of equities, bonds or Swiss funds, redemption of securities, /corporate reorganizations, trades in foreign bonds by foreign investors) are exempt from Swiss transfer stamp duty.

In relation to the Swiss transfer stamp duty that is levied on trades (of equities, fixed income, etc.) the place of trading is not relevant. In fact it is relevant whether a Swiss or Liechtenstein domiciled securities dealer (Effektenhändler) acts as counterparty or intermediary.

Responsible for the payment of the Swiss transfer stamp duty (to the Swiss tax authority) is always the last involved Swiss or Liechtenstein domiciled securities dealer. It is market standard that the securities dealer re-charges the stamp duty to the counterparties involved.

Issuance Stamp Duty

Issuance duty is levied on the gratuitous and non-gratuitous issuance and the increase of the par value of equity securities (shares) of Swiss corporations, limited liability companies, cooperative societies and public corporations and on “a-fonds-perdu” contributions. The tax liability rests with the company issuing equity holding rights or receiving the “a-fonds-perdu” contribution.

In case certain conditions are met, no issuance duty is levied on mergers, changes of legal structure, spin-off of corporations or on the transfer of a company’s seat from abroad to Switzerland.

Value Added Tax (VAT)
The VAT is a general consumption tax. It is levied on all phases of production, distribution and the domestic service sector (domestic tax), on the acquisition of services supplied by companies domiciled abroad (service import tax) as well as on the import of goods (import tax).

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