Trading Rules

Basis of the trading rules: constitutional and federal law

The operation of a securities exchange and the function of a securities dealer are activities that essentially fall within the scope of free trade and commerce. Based on its constitutional powers, the federal government enacted the Federal Act on Stock Exchanges and Securities Trading (SESTA) in the general interest of the entire Swiss economy. This law came into being as a means of commercial law enforcement. It supplanted the various existing cantonal decrees and created a uniform legal framework that is applicable nationwide. In March 1995, the Swiss Parliament formally adopted the Federal Act on Stock Exchanges and Securities Trading, and the law entered into force on 1 February 1997.

Federal law

The Federal Act on Stock Exchanges and Securities Trading (SESTA) has the purpose of preserving and improving the efficiency, liquidity, transparency and security of the capital market.

For the purpose of ensuring investor protection and functional safeguards, this law also lays down the requirements for establishing and operating securities exchanges, as well as for the professional dealing in securities.

• Within the scope of functional safeguards, the operating capability of a stock exchange as an institution is to be protected so as to ensure that the exchanges can fulfil their crucial economic role of optimally allocating financial resources in the most efficient manner possible.
• With regard to investor protection, the individual interests of the investor are to be safeguarded against any disadvantage vis-à-vis banks, securities dealers, issuers or other investors.

To ensure its ability to adapt to changing circumstances, SESTA was conceived as a framework law that contains only a limited number of primarily fundamental rules, and otherwise provides a large degree of leeway for self-regulation. The Federal Banking Commission (FBC), as the national supervisory authority, ensures that the relevant legal and regulatory rules are established and complied with.

In essence, self-regulation - as opposed to federal regulation - means that the necessary rules and procedures are adopted within the private sector. The principle of self-regulation anchored in Art. 4 SESTA applies to the organisation and supervision of trading, as well as to the rules governing exchange membership and the listing of securities. As a result of this self-regulatory approach, the stock exchange is granted a degree of autonomy that is to be specifically determined. A central element in this regard is the self-regulation of the stock exchange under the overall supervision of the Federal Banking Commission (FBC).

Ordinances

In addition, the Federal Council enacted two implementing ordinances relevant to the securities industry:

• The Implementing Ordinance on Stock Exchanges and Securities Trading (SESTO), in force since 1 February 1997, specifies the licensing requirements for securities dealers and contains rules on the organisation and governing bodies of the stock exchange (see Art. 10 SESTA).
• The Federal Banking Commission Stock Exchange Ordinance contains rules governing the record-keeping and reporting obligations of securities dealers, as well as the reporting requirements associated with the disclosure of shareholdings. It also regulates the obligation to make an offer upon the acquisition of a significant percentage of an issuer's equity securities (see Arts. 15 and 32 SESTA).

Contract law

On the basis of contract law, the Stock Exchange Act and related ordinances are implemented at the SIX Swiss Exchange in the form of:

• Statutes
• General Conditions
• Rules and regulations
• Guidelines
• Directives
• Messages