Category Archives: Securities

Can publicly available data become insider information?

Investors of the twenty-first century can harness the power of publicly available data to form a view on a specific company or – more generally – on a particular investment topic. Satellite imagery, marine and air traffic trackers, keyword or search engine trends can provide critical insights on how a company is performing, sometimes unbeknownst to the company itself and most other interested investors. This contribution explores whether there are circumstances in which data extracted from public sources is or can become insider information under Swiss law.

By Ariel Ben Hattar (Reference: CapLaw-2019-13)

Popular Initiative on Responsible Enterprises: Switzerland’s Long Arm on Subject Enterprises

Although its fate and timing are very unclear, the popular initiative “for responsible enterprises – for the protection of human rights and environment” (initiative on responsible enterprises; Konzernverantwortungsinitiative; Initiative Multinationales Responsables; “Initiative”) is not only hotly debated among the many Swiss based international companies that would be affected by it, but also among lawmakers in Berne. In short, the Initiative, which is expected to be voted upon by the Swiss people, proposes that enterprises shall be held liable before a Swiss court if one of its controlled enterprises violates human rights or environmental standards abroad. These enterprises will have additional duties and will have to monitor and report on the compliance with these duties.

The Initiative raises a bundle of legal questions of which we focused on one: Its scope of applicability. As we will see, a far reaching concept is proposed to ensure that a large number of enterprises is subject to the Initiative.

By Thomas U. Reutter / Annette Weber (Reference: CapLaw-2019-14)

Asset Backed Securities Under the Financial Services Act

The Financial Services Act of 15 June 2018 (FinSA) and the consultation draft Financial Services Ordinance (draft FinSO) dated 24 October 2018 include significant new rules for the distribution of financial instruments and the regulation of financial services in Switzerland. This article discusses the potential impact of the new rules on Asset-Backed Securities (ABS) in relation to the timing of prospectus review and approval, the obligation to prepare a Key Investor Document (KID) and the regulation of services typically provided by investment banks in connection with ABS transactions. The article is based on the version of draft FinSO published for public consultation.

By Daniel Adler / Daniel Bono (Reference: CapLaw-2019-01)

The Rise of Green, Social and Sustainability Bonds – The Swiss Perspective

The global market for green, social and sustainable investment is growing at an increasing rate. This is the result of considerable growth of both the demand for, and the supply of, capital for green, social and sustainable projects. Despite Switzerland having a highly developed and efficient capital market and being one of the world’s largest cross-border wealth management centres, the Swiss market for green, social and sustainability bonds is only just beginning to gain momentum. In view of this, the author expects this sector to significantly grow in the coming years.

By Andreas Josuran (Reference: CapLaw-2019-02)

SIX Published Criteria for Crypto Assets as Eligible Underlyings

On 10 September 2018, the SIX Exchange Regulation Ltd. published its revised Circular No. 3 that includes rules on the eligibility of certain crypto assets (crypto currencies) as underlyings of derivatives listed at SIX.

By Benjamin Leisinger (Reference: CapLaw-2018-42)

Insider Trading and Market Manipulation in Tokens

Trading in tokens is currently in the spotlight of the public’s and the regulator’s attention. Based on distributed ledgers-technology, blockchain technology is used to issue tokens as tradable digital units and to record ownership and transactions of the issued tokens. At present, there are no specific laws and little regulation applying to trading in tokens in Switzerland. With a view to improve market confidence as well as to ensure proper functioning and transparency of token trading, a variety of legal issues have yet to be resolved. In particular, the question of insider trading and market manipulation needs to be clarified.

By Thomas U. Reutter / Daniel Raun (Reference: CapLaw-2018-43)

New Reporting Obligations for Securities Dealers and Participants of Swiss Trading Venues

On 1 January 2018, FINMA’s new circular 2018/2 on the reporting of securities transactions (“FINMA Circular 18/2”) entered into effect. The purpose of FINMA Circular 18/2 is to implement the reporting obligations set out in the Swiss Financial Market Infrastructure Act (“FMIA”) and to further regulate technical aspects of the reporting obligations. Compared to the previously existing reporting obligations, the FMIA and FINMA Circular 18/2 will bring about a number of significant changes, including the reporting of certain derivatives transactions and reporting of beneficial owners.

By Patrick Schleiffer / Patrick Schärli (Reference: CapLaw-2018-14)

First experiences with the New Disclosure Law

On 1 March 2017, a partial revision of the Ordinance of the Swiss Financial Market Supervisory Authority on Financial Market Infrastructures and Market Conduct in Securities and Derivatives Trading (FINMA Financial Market Infrastructure Ordinance, FMIO-FINMA) regarding disclosure of significant shareholdings entered into force. On 3 October 2017, the Disclosure Office of SIX Swiss Exchange (“DO”) published its annual report for 2016 (“DO Annual Report 2016”) which dealt with many of the questions that lead to the partial revision of the FMIO-FINMA.

This article provides an overview of the first experiences with the new disclosure law, in particular in relation to the reporting requirement for parties with the power to freely exercise voting rights and the reasoning that resulted in the partial revision together with some critical thoughts in this context (Section 1). This article also summarizes the practice of the DO regarding the scope of the term “beneficial owner” (Section 3). Furthermore, FINMA recently made some clarifying comments on the reporting system for collective investment schemes in art. 18 FMIO-FINMA, which will be taken up in Section 2.

By Andrea Rüttimann (Reference: CapLaw-2018-15)

Swiss Capital Markets: New Rules regarding Swiss Withholding Tax

A bond issued by a foreign resident issuer but guaranteed by its Swiss resident parent company is reclassified as a domestic issuance and subject to 35 percent withholding tax if the proceeds raised under such bond are used in Switzerland. According to new rules which entered into force on 1 April 2017, it is possible to use the proceeds in Switzerland up to an amount equal to the equity of the foreign issuer and to still avoid a reclassification.

By Stefan Oesterhelt (Reference: CapLaw-2018-01)

Cross-Border Transactions in Intermediated Securities: Switzerland Maintains its Lead (Part 2/2)

“The transnational nature of collateral goes beyond the mere (but important) fact that the parties to a swap are often incorporated in different jurisdictions. Collateral may be posted in different currencies, or in the form of government bonds issued by different governments. The collateral is held with intermediaries often incorporated in yet other jurisdictions, with places of business in still other locales. These intermediaries book the collateral in computerized ledgers maintained on servers that may be located elsewhere in the world. And if, as is permitted under the law of some countries, the pledgee (the party that receives the collateral) “repledges” the collateral to yet another party to satisfy its own obligations, which then repledges it again, then lawyers are left to make sense of a constant global movement of collateral in and out of accounts in many jurisdictions in terms of legal rules created to address a far more stationary and localized conception of property and contract rights.”

Annelise Riles, Collateral Knowledge: Legal Reasoning in the Global Financial Markets, p. 43 (University of Chicago Press, 2011)

By Thomas Werlen / Matthias Wühler / Jonas Hertner (Reference: CapLaw-2018-02)