FinfraG Article 39 Regulation

What is FinfraG Article 39?

FinfraG Article 39 of the Financial Markets Infrastructure Act (FMIA), or ‘FinfraG’, is the Swiss Financial Market Supervisory Authority (FINMA) mandate to create a level of equivalency with the EU's MiFID II. Article 39 states that participants admitted to a Swiss trading venue must report details of their transactions to a repository to ensure market transparency.

Firms subject to FinfraG Article 39 can report details of their transactions to the SIX Swiss Exchange. This can be done in one of two formats, depending on your firm type:

  • ESMA MiFID II format – as described in RTS 22. Firms already reporting for MiFID II can use this form to route to SIX. This format includes full scope of personal information required by MiFIR transaction reporting. Foreign security dealers can use this format for reporting through an ARM recognised by the SIX Swiss Exchange (for example, Regulatory Reporting)

  • Swiss Format – for Swiss domiciled firms or (optionally) foreign dealers, if they prefer. This format is described in FINMA Circular 2018/2 (margin numbers 27-30) and governed by the technical specifications. It allows for use of internal identifiers in place of personally identifiable information. Using this format requires direct connectivity to SIX

Who is impacted by this regulation?

FINMA requires all trading venue participants and other Swiss/foreign securities dealers admitted to a trading venue to report securities transactions to ensure the transparency of securities trading.

Security dealers in scope:

  • Swiss Trading Participants, Remote Members, Swiss Reporting Members and foreign branches of Swiss securities dealers

Financial instruments in scope:

  • Equities: According to FINMA Circular 2018/2 margin number 9, financial instruments that are admitted to a trading venue in Switzerland are subject to reporting obligations; the list of instruments in scope is published daily by SIX
  • Equity-based derivatives (both ETD and OTC): The duty to report trades and order transmissions in derivatives with one or several underlying instruments applies only if at least one underlying instrument is subject to reporting obligations and has a weighting of more than 25% in the financial instrument traded

Transactions subject to the reporting obligation:

Trades and the transmissions of orders in reportable financial instruments done by securities dealers subject to the reporting obligation as an intermediary, shall report no matter if they were traded on- or off-order book, executed on- or off-exchange and regardless if the order is on behalf of a client or for proprietary trading.

  • For domestic and foreign members, this is a two-sided reporting obligation
  • In case of cross trades executed on or off the order book, a transaction report for each side of the trade – for the buy-side and sell-side – must be submitted
  • A transfer in a reportable financial instrument from one custody account to another, regardless of a change of beneficial owner, is not subject to the reporting obligation under the terms that no securities dealer subject to the reporting obligation took an active role in initiating the transaction/transfer. Direct client instructions to transfer financial instruments do not constitute a reportable transaction

FinfraG Article 39 reporting requirements

From a reporting infrastructure perspective, ensure you provide transaction reporting in the required format and that the necessary connectivity arrangement is in place:

  • Transaction Reporting in Swiss format or European Union format as specified in the regulatory technical standards (RTS 22) can be fulfilled using the SIX Swiss Exchange Transaction Reporting Interface (TRI). Foreign securities dealers subject to the reporting obligation may report transactions executed outside Switzerland in reportable financial instruments to a foreign reporting office (Approved Reporting Mechanism or ARM) recognised by SIX Swiss Exchange
  • Ensure you have a valid Legal Entity Identifier (LEI): Securities dealers subject to the reporting obligation using the RTS 22 standard must be in possession of a valid LEI conformant to ISO 17442:2012. The LEI needs to be communicated to and agreed with the Reporting Office prior to commencing transaction reporting with the RTS interface

Recommended solution

Principles of the reporting obligation

How can LSEG Post Trade help?

When harnessed, regulation can be powerful. Through years of expertise and trusted data accuracy, Regulatory Reporting can help you reframe regulation, so it’s no longer a hindrance, but an opportunity. To find out we can help you meet your FinfraG Article 39 reporting obligations, visit our FinfraG Solutions page.

For more information on Regulatory Reporting’s solution for FinfraG Article 39 reporting, please complete the form below.

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Disclaimer

Content on this page is not intended as an exhaustive or definitive guide to the regulations, and is not the views of LSEG, but for general information purposes only. For detailed and up to date guidance on regulation you should always seek specialist advice and/or consider the actual regulation itself.