Swiss Otc Master Agreement

The regulation of derivatives transactions is a key concern of the Swiss legislator and, with the infrastructure rules implemented, strict obligations have come into force, largely in line with European Union rules (EMIR). As a result, players in the Swiss market must implement certain obligations within a limited time frame. Effects are expected on existing derivative contracts with Swiss and non-Swiss counterparties, with the need to amend and complement certain framework agreements concluded. Legislators and regulators around the world intend to have as many OTC derivatives transactions as possible through a central counterparty (CCP), and FinfraG is no exception. Once market participants know that they are subject to clearing obligations, either by categorization or because of the class of derivatives they act on, they must decide strategically how they organize the clearing body to comply with FinfraG rules. The first step is to choose an appropriate central counterparty. In order to facilitate the clearing of certain derivatives transactions, the parties must enter into a “customer compensation agreement” that includes and amends certain standard terms of clearing customers. It is essential to negotiate precisely the terms of such a customer compensation contract, given that the underlying master contracts (for example). B ISDA or Swiss Master Agreements over-the-counter derivatives contracts) and trading confirmations are modified by the terms of the customer clearing contract for offset derivatives transactions. The parties should also pay attention to the collateral conditions in the counterparty agreements and their impact on prices in the event of a departure from the terms agreed in the bilateral guarantee agreement. FinfraG`s reporting obligations ensure that the details of derivative contracts, changes to these contracts and their termination are notified to a central repository registered or granted by the Swiss regulatory authority. Contrary to EU requirements, finfraG follows the US approach and allows for a unilateral report.

Counterparties must agree on the responsibility for the declaration. Banks and large financial institutions will be able to easily facilitate reporting. Smaller establishments, such as small non-financial counterparties. B, will either rely on their larger counterparties to process the reports, or – if they themselves are faced with a smaller institution without such an entity – update their internal systems to meet operational and technical requirements, to ensure compliance with the reporting obligations defined by FinfraG. Reporting obligations do not necessarily require a change in existing agreements. The Swiss regulator FINMA has authorised and recognised the first two central repositories under the Financial Infrastructure Act (FMIA): SIX Trade Repository AG and Regis-TR S.A.