Swiss Federal Council grants more time to non-financial counterparties to start reporting derivative transactions

Maria Nikolova

The Council has shifted the start date of the derivative transactions reporting duty for small non-financial counterparties to January 1, 2024.

Development of Financial Passport across all sectors

At today’s meeting, the Swiss Federal Council decided to bring into effect the derivative transactions reporting duty for small non-financial counterparties on January 1, 2024. The reporting duties of other market participants are not affected by the decision.

The Financial Market Infrastructure Act (FinMIA), together with the associated ordinance, entered into force on January 1, 2016. It regulates, inter alia, the organisation and operation of financial market infrastructures and market conduct concerning derivatives trading, including a reporting duty for derivative transactions. This reporting duty requires market players to report such transactions to central trade repositories. Currently, the reporting duty applies to financial counterparties (including banks and insurers) and certain non-financial counterparties.

The duty would have come into force on January 1, 2019 for small non-financial counterparties (e.g. industrial companies), but during its meeting on September 14, 2018, the Federal Council decided to bring the derivative transactions reporting duty for small non-financial counterparties into effect on January 1, 2024 and to extend the corresponding transitional period.

The Federal Council attributed its decision to the fact that the FinMIA is set to be reviewed in the coming years. This is partly because the body is already witnessing the emergence of certain international developments, for instance, in the European Union, and technological developments, especially in the fintech area, that could give rise to a revision of the FinMIA.

The Federal Department of Finance (FDF) will work on reviewing the FinMIA from 2019. Given these developments, the reporting duty for small non-financial counterparties is to be postponed until this review – and any adjustment to the FinMIA – have been completed.

Let’s recall that, in October last year, the Swiss Financial Market Supervisory Authority (FINMA) noted that it had come to its attention that non-financial companies had been facing operational complexities in attempting to implement derivative reporting requirements in application of the Financial Market Infrastructure Act (FMIA). This concerns derivative transactions by so-called small non-financial counterparties conducted with foreign counterparties.

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