SWX message no. 73/2006

Transcription

1 <<TO: FA, >> <<Send>> SW message no. 73/2006 From: Member Services Zurich Member Services London Tel.: +41 (0) (0) Fax: +41 (0) (0) Pages: 7 Date: Subject: Alex the new European exchange for trading in Structured Products (incl. Warrants) framework Ladies and Gentlemen On 23 October 2006, the SW Group and Deutsche Börse AG signed a cooperation agreement to found Alex Exchange Holding S.A., a European exchange for Structured Products. This message contains 1. strategic and organisational issues, 2. regulatory issues, 3. admission of participants and traders, 4. administrative issues 5. technical trading issues in the context of the introduction of Alex. 1. Strategic and organisational issues The joint venture partners are combining their existing trading activities in Structured Products. In Switzerland, this relates to the SW Swiss Exchange market segment Securitised Derivates and in Germany, to the Smart Trading segment and all other Warrants and Certificates traded on the Frankfurt Stock Exchange. The jointly owned exchange organisation will operate trading facilities in Frankfurt (for Germany and other EU countries) and in Zurich (for Switzerland) and will be launched on 1 January Thereby, the Swiss venue for trading in Structured Products (incl. Warrants) will be operated from 1 January 2007 by the new Alex Exchange Switzerland Ltd., which is domiciled in Zurich. For more information on the new Alex exchange, the two marketplaces and their corporate and organisational structures, please visit on the internet. The following information only concerns the Swiss venue for trading in Structured Products (incl. Warrants). SW Swiss Exchange Selnaustrasse 30 Postfach CH-8021 Zürich

2 Alex the new European exchange for trading in Structured Products (incl. Warrants) framework Page 2 2. Regulatory issues a) Listing, surveillance of trading and market control Alex Exchange Switzerland Ltd. is a securities exchange under Swiss law and therefore subject to Swiss supervisory law. It does not, however, have the authority to list (admit) issuers and their securities and does not perform its own surveillance of trading (surveillance and enforcement). In practice, this will mean that: As at present, the Admission Board of the SW Swiss Exchange will be responsible for listing derivative products pursuant to Art. 8 SESTA and other applicable rules and regulations. As at present, Surveillance and Enforcement, a specialist department of the SW Swiss Exchange, will monitor trading in these products pursuant to Art. 6 SESTA. Market control of trading in Derivative Products on the other hand will be performed by SW Swiss Exchange in the name of Alex Exchange Switzerland Ltd. b) Exchange and reporting requirement The Exchange and reporting requirement for Derivative Products will remain unchanged. The SW Swiss Exchange will be the central notification office for transactions in derivative products. The SW will accept all transactions that are subject to the reporting duty to be reported if they are conducted (on order book) or reported (off order book) via the trading platform of Alex Exchange Switzerland Ltd. (see Section 5). Therefore, the reporting procedure and notification office for the associated participants reporting duty (via RSD tool) will remain unchanged. 3. Admission of participants and traders to Alex Exchange Switzerland Ltd. A "grandfathering" process for all participants (incl. remote participants) and traders of the SW Swiss Exchange is planned for 1 January Its purpose is to make it as easy as possible for all involved parties to become a participant of and be admitted as a trader at Alex Exchange Switzerland Ltd. This means that: As of 1 January 2007, all trading participants and traders of the SW Swiss Exchange will be recognised as trade participants and traders of Alex Exchange Switzerland Ltd. A participation or trader registration on Alex Exchange Switzerland Ltd. always requires a participation at the SW Swiss Exchange. Admission as a participant or trader at the SW Swiss Exchange will automatically ensure admission as a participant or trader at Alex Exchange Switzerland Ltd. Apart from certain adjustments in connection with the securitised derivatives market, the regulatory framework of Alex Exchange Switzerland Ltd. corresponds to that of the SW Swiss Exchange. Participation in Alex Exchange Switzerland Ltd. will not be subject to additional participation or connectivity fees. The new General Conditions and Directives of Alex Exchange Switzerland Ltd., as well as other legal documents, will be sent to you separately at a later date. SW Swiss Exchange Selnaustrasse 30 Postfach CH-8021 Zürich

3 Alex the new European exchange for trading in Structured Products (incl. Warrants) framework Page 3 4. Administrative issues From 1 January 2007, the regulatory and organisational framework described above will entail the following legal and administrative procedures for trading participants of Alex Exchange Switzerland Ltd.: Listing of issuers and derivative securities Listing procedure Listing applications should be sent to Notices relating to maintenance of listing (ad hoc publicity) should be sent to provider Notices relating to listing, and their publication, will be handled by Invoices The listing and maintenance fees will be invoiced by Questions Questions relating to listing and admission should be directed to Participant/trader admission and connectivity Admission procedure Applications for admission as a participant or trader should be sent to Applications for admission as an associated participant should be sent to Trader examinations will be held by... (and recognised by Alex) SW Alex Exfeed provider /notices relating to participants will be handled by Invoices Participation and connectivity fees will be invoiced by Questions Questions relating to participant/trader admission should be directed to Exchange trading (incl. market surveillance and market control) Trading procedure relating to trading should be sent to provider Invoices Questions Notices relating to trading, and their publication as part of market surveillance (trading violations, etc.), will be handled by Auditor's reports should be submitted to Notices relating to trading, and their publication as part of market control (mistrade decisions, etc.), will be handled by Trading fees will be invoiced by Capacity fees (QPS) will be invoiced by Reporting fees (associated participants) will be invoiced by Questions relating to surveillance of trading should be directed to Questions relating to market control should be directed to Clearing and settlement Questions Questions relating to clearing and settlement should be directed to Market data and distribution of information Market data procedure Market data will be distributed by provider Notices relating to market data feed will be handled by Invoices Market-data fees will be invoiced by Questions Questions relating to ad hoc evaluations and statistics should be directed to Index licencing will take place through SW Swiss Exchange Selnaustrasse 30 Postfach CH-8021 Zürich

4 Alex the new European exchange for trading in Structured Products (incl. Warrants) framework Page 4 From mid-march 2007, all information relating to Alex and to the technical aspects of trading will be available at Until then, will be the official publication medium for the derivatives market. 5. Technical trading issues a) SW Platform From a trading point of view, there will be no changes for trading participants or to their IT infrastructures. From 1 January 2007, the securitised derivatives market of the SW Swiss Exchange will be carried on seamlessly by Alex Exchange Switzerland Ltd. on the same trading platform (the SW Platform with quote system (Quotematch) and order system within the Exchange System). There will be no technical migration of securities on the SW Platform itself. In particular, this means that: On 1 January 2007, all existing and valid orders will remain unchanged in the Exchange System (no order deletions). Trade slips will remain unchanged in terms of both content and format. No new exchange code will be introduced to the SW Platform or its interfaces. The only currently valid exchange code of the SW Platform, "SW" (or "VT" for the virt-x instance) will remain unchanged and will not be supplemented by an additional code. There will be no software adaptations made to the existing connectivity options (SW Trading System, SW FI, Network Linked, FI Linked Connectivity, Quote System API). b) Alex exchange It will be possible to distinguish between the two exchanges (SW and Alex), as well as between their securities universes, on the Trading Platform (and at their interfaces) simply on the basis of the of a given security. The following s, which already exist, will define the new Alex securities exchange from 1 January 2007: CW DR OW KO KI WC WI SP SO SC SB Covered Warrant Warrant on Commodity Other Warrant Knock-Out-Warrant Knock-In-Warrant Warrant on Currency Warrant on Interest Rate Structured Products Warrants Structured Products Commodities Structured Products Certificates Structured Products Bonds Please note that the s RI (Rights), SW (Shareholder Warrant) and WB (Warrant of Bond) will technically be listed as derivatives on the SW Platform (Instrument Type Code 2) but will not belong to the securities universe of the Alex exchange. As a preparatory measure, the following new s will be introduced on 1 January 2007 in order to categorise structured products in a way that is more in line with the needs of the market. The new s will also belong to the securities universe of the Alex exchange, but they will not be activated until further notice. SW Swiss Exchange Selnaustrasse 30 Postfach CH-8021 Zürich

5 Alex the new European exchange for trading in Structured Products (incl. Warrants) framework Page 5 Further information on the new s will be provided in an SW message when they are activated or actively used. Leveraged products (Code range W (first code position), second code position starting at J and ending at Z) WJ WK WL WZ Warrant Knock-Out-Warrant Mini-Futures weitere Hebel-Produkte Yield-optimisation products (Code range (first code position), second code position starting at A and ending at Z) A B C D E F G Z Discount-Zertifikat Barrier-Discount-Zertifikat Reverse Convertibles Barrier-Reverse-Convertibles Capped-Outperformance- Zertifikat Express-Zertifikat Step-Zertifikat weitere Rendite-Optimierungs- Produkte Capital-protection products (Code range Y (first code position), second code position starting at A and ending at Z) YA YB YZ Kapitalschutz-Produkte ohne Cap Kapitalschutz-Produkte mit Cap weitere Kapitalschutz-Produkte Participation products (Code range Z (first code position), second code position starting at A and ending at Z) ZA ZB ZC ZD ZE ZZ Tracker-Zertifikat Bonus-Zertifikat Outperformance-Zertifikat Twin-Win-Zertifikat Airbag-Zertifikat weitere Partizipationsprodukte The new s conform precisely to the classification of the Swiss Structured Products Association (SSPA). In order to reflect new product categories defined by the SSPA later on, each of the main categories (leveraged products, yield-optimisation products, capitalprotection products and participation products) is given its own code range, which is defined by the first and second code position (see above). All other existing s not listed here will continue to define the securities universe of the SW. SW Swiss Exchange Selnaustrasse 30 Postfach CH-8021 Zürich

6 Alex the new European exchange for trading in Structured Products (incl. Warrants) framework Page 6 c) Market data distribution (SMF/QMF) (new market code) A new Market Identification Code (MIC) will be introduced for market data distribution (SMF/QMF). From 25 June 2007, the new MIC "ALE" or the corresponding Exchange Code with a value of 3 will be available exclusively via SMF/QMF, the Swiss market data feed, for the abovementioned securities universe of Alex Exchange Switzerland Ltd. (see Section b). d) Transitional period for technical adjustments in order to reflect the new exchange The technical framework described under Sections a) to c) will have a direct impact on the interfaces and systems that receive and process your data. Therefore, in order to comply with Daily journal-keeping and reporting requirements (Art. 1 and Art. 5 SESTO-SFBC), Transparency obligations in connection with customer settlement (Art. 7 of the Rules of Conduct for Securities Dealers in Carrying Out Securities Transactions, guidelines of the SBA) and Market and basic data delivery to vendors (e.g. in order to value securities positions), 25 June 2007 was submitted as the desired implementation deadline in the application for approval as a securities exchange that was lodged with the Swiss Federal Banking Commission. Participants and vendors will have to introduce the new Alex exchange before this deadline. In other words: The new Alex Exchange Switzerland Ltd. will be launched and will actively participate in the market on 1 January 2007 (as descrtibed in Sections 1-4). Both vendors and banks will have to reflect the new Alex exchange and its legal and technical ramifications by 25 June The precise implementation date for the new MIC/ISO market code for market and basic data delivery by the vendors will be communicated to you directly by the relevant vendors. Implementation must be complete by 25 June SW Swiss Exchange Selnaustrasse 30 Postfach CH-8021 Zürich

7 Alex the new European exchange for trading in Structured Products (incl. Warrants) framework Page 7 We hope you find this overview helpful. Should you have any questions, please do not hesitate to contact us. For business-related information, please contact: Member Services Zurich +41 (0) [email protected] Member Services London +44 (0) [email protected] For technical information, please contact: Local Support Center Zurich +41 (0) [email protected] Local Support Center London +44 (0) [email protected] Local Support Center Geneva +41 (0) [email protected] Yours sincerely SW Swiss Exchange Christoph Bigger Head of Strategic Business Development Adrian Isler Head of Market Operations SW Swiss Exchange Selnaustrasse 30 Postfach CH-8021 Zürich