Circular 2018/2
Duty to report securities transactions
Duty to report securities transactions

Reference:

FINMA Circ. 18/2 "Duty to report securities transactions"

Date:

25 January 2017

Entry into force:

1 January 2018

Last amendment:

4 November 2020

Concordance:

former FINMA Circ. 08/11 "Duty to report securities transactions" of 20 November 2008

Legal framework:

FINMASA Article 7 para. 1 let. b
FinSA Article 3 let. b
FinIA Articles 1, 41 ff., 50 f.
FinMIA Article 39
FinMIO Article 37
FinIO Article 75
FinMIO-FINMA Articles 2, 3, 4 and 5

Laupenstrasse 27, 3003 Bern
Tel. +41 (0)31 327 91 00, Fax +41 (0)31 327 91 01
www.finma.ch

X

X

X

Rating agencies

Audit firms

Other

AMLA
SRO-supervised institutions

SRO

Other intermediaries

Representatives of foreign
CISs

Custodian banks

SICAFsLimited partnerships for CISs

SICAVsParticipants

Payment systems

Trade repositories

Central securities depositories

Central counterpartiesCISA

FinMIAX

Trading venues

Investment firms (proprietarian
trading)
Investment firms (non propriet.
trading)

FinIA
Fund management companies

Managers of collective assets

Trustees

Portfolio managers

ISA
Intermediaries

Insurance groups and congl.

Insurers

Other intermediaries

Financial groups and congl.

Banks

BankA

AdresseesContents

I.

Background and purpose

Margin no.

1-4

II.

Scope of application

Margin no.

5

III.

Definition of terms

Margin no.

6-11

IV.

Principles of the duty to report

Margin no.

12-14

V.

Reportable transactions

Margin no.

15-20

VI.

Exemptions from the duty to report

Margin no.

21-26

A.

Transactions executed outside Switzerland in
Swiss securities and in derivatives with Swiss
securities as their underlyings

Margin no.

22-23

B.

Transactions executed outside Switzerland inforeign securities and in derivatives with foreign
securities as their underlyings

Margin no.

24-26

VII. Information on the beneficial owner

Margin no.

27-31

VIII. Disclosure officeMargin no.

32-33

IX.

Transitional provision

Margin no.

34

X.

Summary of key information

Margin no.

35-80

A.

Equities

Margin no.

35-38

B.

Bonds

Margin no.

39-44

C.

Derivatives

Margin no.

45-49

D.

Pre-emptive rights

Margin no.

50-51

E.

Collective investment schemes

Margin no.

52-54

F.

Transactions outside Switzerland

Margin no.

55-56

G.

Other reportable information

Margin no.

57-76

H.

Miscellaneous

Margin no.

77-80

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I. Background and purpose
Article 39 of the Financial Market Infrastructure Act (FinMIA; SR 958.1) sets out the duty ofparticipants admitted to a trading venue under Article 34 para. 2 FinMIA to report all theinformation necessary for transparent securities trading (“reporting duty”).

1

Securities firms that engage in activities requiring authorisation in Switzerland but are notadmitted as participants to a trading venue are required under Article 51 para. 1 of the
Financial Institutions Act (FinIA; SR 954.1) to report all the information necessary to ensurea transparent market.

2

The trading supervisory body must have access to records of reportable transactions for the
purpose of supervision (see Article 31 FinMIA) so as to ensure that the trading venue cannotify FINMA in the event of suspected violations of the law.

3

This circular explains the duty to report under Article 39 FinMIA and Article 37 of the Financial
Market Infrastructure Ordinance (FinMIO; SR 958.11), Article 51 para. 1 FinIA and Article 75of the Financial Institutions Ordinance (FinIO; SR 954.11) as well as Articles 2-5 of the
FINMA Financial Market Infrastructure Ordinance (FinMIO-FINMA; SR 958.111).

4

II. Scope of application
This circular applies to all trading venue participants under Article 34 para. 2 FinMIA and to
all other Swiss and foreign securities firms under Article 41 FinIA and Article 57 FinIO(hereinafter referred to collectively as “participants”).

5

III. Definition of terms
Transactions:6

Contracts entered into between participants to trade securities as defined in Margin no. 9
below or derivatives as defined in Margin nos. 9 and 10 below that have as their underlying
at least one security admitted to trading on a Swiss trading venue. This definition includes
both the execution of orders and the forwarding of orders for subsequent execution.

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Forwarding of orders:7

An order is forwarded when the participant involves a further participant for the purpose of
executing the order or the transaction and acts in respect of that further participant in its own
name for the account of a third party, in the name of a third party for the account of a third
party or purely as an intermediary. This results in a chain of orders and/or transactions between the participants involved.
Admission to trading on a trading venue:

8

The legal definition of the term “trading venue” can be found in Article 26 FinMIA, that of“admission to trading” in Articles 35 and 36 FinMIA.
Securities:

9

Securities under Article 2 let. b FinMIA in conjunction with Article 2 para. 1 FinMIO and Article
3 let. b FinSA that are admitted to trading on a trading venue in Switzerland. This definition
also includes standardised derivatives suitable for mass trading such as exchange-tradedderivatives (ETDs), warrants and structured products, including exchange-traded products(ETPs, a cover-all term for collateralised exchange-traded commodities (ETCs) and exchange-traded notes (ETNs)).
Derivatives:

10

Derivatives under Article 2 let. c FinMIA in conjunction with Article 2 para. 2 FinMIO that are
not securities as defined in Margin no. 9 above.
Swiss and foreign securities:

11

Swiss securities
Securities issued by a company with its registered office in Switzerland or listed in Switzerland.
Foreign securities
Securities issued by a company with its registered office outside Switzerland and not listed
in Switzerland.
Listing:
Defined in Article 2 let. f FinMIA.
Primary listing
If a company is not yet listed on any other exchange when it applies for a listing on a Swiss
exchange, its only option is a primary listing.
Secondary listing
Listing of securities in a country other than the one where the company first had its shares
listed.
The following possibilities therefore exist:

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Issuing
company
withregisteredoffice in Switzerland

Primary listing
Switzerland

Yes

in

Secondary listing on
a trading venue in
Switzerland

Classification

No

No

Swiss securities

Yes

No

Yes

Swiss securities

Yes

Yes

Yes

Swiss securities

No

Yes

No

Swiss securities

No

No

Yes

Foreign securities

No

No

No

Foreign securities

IV. Principles of the duty to report
The duty to report applies to all participants as of their admission to a trading venue or theirauthorisation under Article 7 FinIA and ceases to apply when such admission or authorisation
ends.

12

Each individual transaction by a participant in the transaction chain, from order generation to
forwarding and execution (e.g. client → participant 1 → participant 2 → trading venue /execution outside trading venue) must be reported. Where orders are forwarded, the firstparticipant with which a client holds an account or custody account must report the required
information on the beneficial owner (or submit a full report in the European Union format, see
Margin no. 31).

13

The further participants in a transaction chain report the participant that forwarded the orderin place of the beneficial owner. Where orders are forwarded, each participant in thetransaction chain must additionally report the unique transaction identification code (tradeID) provided by the trading venue. If there is more than one trade ID due to partial execution,
all trade IDs must be reported. The participants are also entitled to entrust a single participant
or a suitable third party with the task of submitting an individual report or a full report on theentire transaction chain (Art. 37 para. 5 FinMIO).
Client orders executed internally must also be reported. Collective orders must be reported
both when executed via a trading venue and when definitively allocated to clients. A direct
placement to the client without booking to the nostro account requires only one report. The
report on interal client allocations must be submitted before the close of trading on thefollowing trading day at the latest. If a single report is submitted in consolidated form forseveral partial executions, this report may show the average price.

14

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V. Reportable transactions
The duty to report covers all of a participant’s transactions in securities as defined in Margin
no. 9 above as well as all transactions in derivatives where at least one underlying has aweighting of more than 25% and is a security as defined in Margin no. 9. If this 25% thresholdis exceeded by the sum of several underlyings but not by one single underlying, the duty toreport does not apply.

15

Where changes to the composition of the underlyings through discretionary decisions during
the term of a derivative are excluded (passive management), the status at the time thederivative was created (i.e. whether or not the threshold was exceeded) applies to alltransactions in that derivative.

16

Participants are additionally entitled to report transactions in derivatives that are not subject
to any duty to report under this circular.

17

Transactions executed by participants via a trading venue in Switzerland as defined in Article
26 FinMIA may be reported after the fact before the close of trading on the following trading
day.

18

Transactions must be reported in Swiss francs, irrespective of whether the price is quoted in
Swiss francs or a foreign currency. Prices must be converted into Swiss francs at arecognised reference exchange rate or the exchange rate prevailing on a liquid currency
trading platform at the time of the transaction.

19

The duty to report covers both participants’ own-account transactions and their transactions
for clients (see Art. 37 para. 3 FinMIO and Art. 75 para. 3 FinIO).

20

VI. Exemptions from the duty to report
Transactions in securities and in derivatives with securities as their underlyings that are
executed outside Switzerland do not have to be reported, subject to the conditions outlined
in Margin nos. 22-26 below.

A.

21

Transactions executed outside Switzerland in Swiss securities and inderivatives with Swiss securities as their underlyings

Participants under Article 34 para. 2 let. c FinMIA (foreign participants) and foreign branchesof Swiss securities firms are not required to report transactions executed outside Switzerland
in Swiss securities and in derivatives with Swiss securities as their underlyings, provided thatthey fulfil the duty to report in the country in question and that the conditions specified in
Article 37 para. 4 let. a FinMIO or Article 75 para. 4 let. a FinIO are met.

22

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23

Where there is no agreement to exchange information under Article 37 para. 4 let. a FinMIO
or Article 75 para. 4 let. a FinIO, foreign participants may also report transactions executed
outside the trading venue and outside Switzerland in Swiss securities and in derivatives with
Swiss securities as their underlyings to a foreign disclosure office recognised by the trading
venue (see Margin no. 33).

B.

Transactions executed outside Switzerland in foreign securities and inderivatives with foreign securities as their underlyings

All participants and foreign branches of Swiss securities firms are exempt from the duty toreport transactions in foreign securities and in derivatives with foreign securities as theirunderlyings in Switzerland if such transactions are executed via a recognised foreign trading
venue or a recognised foreign organised trading facility (OTF) (see Art. 37 para. 4 let. b
FinMIO and Art. 75 para. 4 let. b FinIO)1.

24

Transactions executed between a foreign participant and a foreign counterparty outside a
trading venue and outside Switzerland in foreign securities and in derivatives with foreign
securities as their underlyings are additionally not covered by the duty to report in
Switzerland. Foreign participants may also report other transactions executed outside a
trading venue and outside Switzerland in foreign securities and in derivatives with foreign
securities as their underlyings to a foreign disclosure office recognised by the trading venue(see Margin no. 33).

25

Furthermore, foreign participants and foreign branches of Swiss securities firms are notrequired to report transactions executed outside Switzerland in foreign securities and inderivatives with foreign securities as their underlyings, provided that the conditions specified
in Article 37 para. 4 let. a FinMIO or Article 75 para. 4 let. a FinIO are met.

26

VII. Information on the beneficial owner
For the purposes of the duty to report, establishing the identity of the beneficial owner iscarried out in accordance with the Anti-Money Laundering provisions. By way of exception
to this principle, however, operating legal entities, foundations and collective investment
schemes are also to be reported as beneficial owners. In the case of trusts, the trustee must
be reported.

27

Natural persons are reported using their nationality and date of birth together with an internal
identification number created by the participant in the following order:

28

1.

Nationality format: two-letter country code according to ISO 3166-1 alpha-2;

1 The list of recognised foreign trading venues under Article 37 para. 4 let. b FinMIO and Article 75 para. 4 let. b

FinIO can be found on the FINMA website: www.finma.ch > Authorisation > Financial market infrastructures andforeign market participants.

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2.

Date of birth format: YYYYMMDD;

3.

Participant’s internal identification number. This can be the master number assigned
to the business relationship, even if the participant has several business
relationships with the same natural person and has assigned a different masternumber to each one.

If the participant has recorded more than one nationality for a particular person, it uses thecountry code that comes first in the alphabetical list according to ISO 3166-1 alpha-2.

29

If the beneficial owner is an operating legal entity, foundation or collective investment
scheme, it is normally reported using the standardised international identification system forfinancial market participants, the Legal Entity Identifier (LEI). Where no LEI is available, theBusiness Identifier Code (BIC) according to ISO 9362:2014 or the Commercial Register
number preceded by the country code (see Margin no. 28) may be reported.

30

Alternatively, a disclosure office may accept a full report in the European Union format as
specified in the regulatory and technical implementing standards (RTS 22) for Article 26 ofRegulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014
on markets in financial instruments and amending Regulation (EU) No 648/2012 (MiFIR).
Natural persons are identified in such reports either as set out in Margin no. 28 above or bymeans of CONCAT in accordance with Article 6 para. 4 RTS 22. The disclosure office may
only allow such alternative reports under MiFIR if it is able to assess these equally for the
purpose of supervising trading under Article 31 para. 1 FinMIA.

31

VIII. Disclosure office
The Swiss trading venues operate a disclosure office that acts as the point of contact for
submitting reports.

32

Foreign participants must report transactions executed outside the trading venue either tothe trading venue’s disclosure office or to a foreign disclosure office recognised by the trading
venue. The trading venue requires the foreign disclosure office to provide it with the reported
information for the purpose of supervising trading, i.e. information reported to a foreign
disclosure office recognised by the trading venue must be forwarded to the Swiss disclosure
office, or the Swiss disclosure office must be given access to such information.

33

IX. Transitional provision
The entry into force of this circular renders FINMA Circular 2008/11 “Duty to report securities
transactions” null and void.

34

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X.

Summary of key information

Information

A.

Duty toreportComments

Equities

Buyback of own shares

Yes

Transactions resulting from buybacks of own shares are reportable.

35

Assignment of own (group) shares to
staff

No

The internal transfer (assignment) of own (group) shares to staff is not reportable.

36

ExercisesharespreferredNo

The exercise of preferred shareholders’ right to convert their preferred shares into ordinary shares is not a fundamental element of securities trading and thus not reportable.

Issue of free shares (including stock
dividends)

No

The issue of free shares takes place on the primary market and is not reportable.

38

Redemption of bonds at or prior tomaturityNo

Bond redemptions are not securities transactions under the Financial Market Infrastructure Act.

39

Buyback of bonds

Yes

Buybacks of bonds admitted to trading on a trading venue in Switzerland are securities transactions under the Financial Market Infrastructure Act.

40

B.

of

convertible

37

Bonds

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Information

Duty toreportComments

Distressed bonds

Yes

Even when the issuer fails to make interest payments, bonds still qualify as being admitted to trading and are subject to the duty to report.

41

Trading in delisted bonds

Yes

As long as they can continue to be traded on a Swiss trading venue, delisted bonds
still qualify as being admitted to trading and are subject to the duty to report.

42

Separation of warrant bonds into warrant and “ex option” bond components

No

The act of separation itself, which comprises booking out the warrant bond and booking in the warrant and the “ex option” bond, is not reportable.

43

Exercise of conversion rights andwarrants

No

The exercise of conversion rights (in relation to convertible bonds) and warrants (inrelation to warrant bonds) is not a fundamental element of securities trading and thus
not reportable.

44

Assignment of (OTC) options to staff

No

The internal transfer (assignment) of options to staff is not reportable. However, subse- 45
quent sales of OTC options by staff may be reportable.

Exercise and assignment of standardised derivatives

No

The exercise and assignment of derivatives contracts admitted to trading on a trading
venue in Switzerland are not fundamental elements of securities trading and thus notreportable.

46

Exercise of warrants and structured
products

No

The exercise of warrants and structured products admitted to trading on a trading
venue in Switzerland, obligations arising from their exercise and redemption or delivery on their expiry are not fundamental elements of securities trading and thus not reportable.

47

C.

Derivatives

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Information

Duty toreportComments

Exercise of OTC options

No

The exercise of OTC options on securities admitted to trading on a trading venue in
Switzerland and obligations arising from their exercise are not fundamental elementsof securities trading and thus not reportable.

48

Issue of free options

No

The issue of free options (including shareholder options) takes place on the primarymarket and is not reportable.

49

Trading in pre-emptive rights

Yes

Pre-emptive rights are securities under Article 2 let. b FinMIA and are subject to the50
duty to report. Internal offsetting of purchases and sales must be reported on a collective basis. Participants of a trading venue fulfil the duty to report by using the trading
system. Other Swiss securities firms are also required to report.

Exercise of pre-emptive rights

No

The exercise of pre-emptive rights admitted to trading on a trading venue in Switzerland is not a fundamental element of securities trading and thus not reportable.

51

No

The issue and redemption of fund units take place via the custodian bank on the primary market and are not fundamental elements of securities trading and thus not reportable.

52

D.

E.

Pre-emptive rights

Collective investment
schemesIssue and redemption of fund units

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Information
Creation and redemption of exchange-traded funds (ETFs) from theissuer’s point of view:a) issue and redemption of ETF
unitsb) receipt and return of the basket ofsharesCreation and redemption of ETFs
from the market maker’s point ofview:a) issue and redemption of ETF
unitsb) receipt and return of the basket ofsharesF.

Duty toreportNo
Yes

Comments
The creation/issue of ETF units by the ETF issuer is a primary market transaction and 53
is not reportable. The redemption of ETF units by the ETF issuer also qualifies as a
primary market transaction and does not give rise to a duty to report.
The receipt and return of the basket of shares, meanwhile, do give rise to a duty to report for the ETF issuer on creation and redemption. These are securities transactions(transfers of ownership), not exchanges.
The receipt and redemption of ETFs through the creation and redemption processes
do not give rise to a duty to report for the market maker.

No
Yes

54

The transfer and return of the basket of shares, meanwhile, do give rise to a duty toreport for the market maker on creation and redemption. These are securities transactions (transfers of ownership), not exchanges.

Transactions outside
Switzerland

Transactions in American Depositary
Receipts (ADRs) where the underlying share has its primary listing in
Switzerland

Yes

ADRs are securities (share certificates denominated in USD, mostly in small denomi- 55
nations) that are not formally identical to the corresponding Swiss securities. They are
subject to the duty to report if the underlying share is a Swiss security that has its primary listing on a trading venue in Switzerland.

Transactions in ADRs where the underlying share does not have its primary listing in Switzerland

No

There is no duty to report if the underlying share does not have its primary listing on a 56
trading venue in Switzerland.

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Information

G.

Duty toreportComments

Other reportable information

Securities lending and borrowing

No

Securities lending is not a fundamental element of securities trading.

57

Repurchase agreements

No

Repurchase agreements (repos) are not reportable.

58

Transfer as collateralNo

The transfer of securities and derivatives as collateral is not reportable.

59

Combination of spot and futurestransactions concerning securities

Yes

These are two separate transactions and must be reported as such. The futurestransaction must also be reported on the trade date (time of entering into the obligation).

60

Volume-weighted(VWAP) orders

Yes

Under Article 3 FinMIO-FINMA, hedging transactions for the purpose of fulfilling
VWAP orders must be reported as client transactions (with the participant as agent).
A VWAP order is a client order with a price guaranteed by the securities firm.

61

Yes

Under Article 3 FinMIO-FINMA, discretionary orders must be executed and reported
as client transactions (with the participant as agent). They must be executed separately from nostro trading.

62

Discretionary orders

average

price

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Information

Duty toreportComments

Grey market transactions (e.g. in equities, warrants and bonds)

No

In principle, transactions prior to the first day of trading, i.e. before the official admis63
sion to trading (known as grey market transactions) are treated as secondary market
transactions (see FINMA Circular 08/4 “Securities journals”, Margin no. 22) and arereportable under Article 39 para. 1 FinMIA or Article 51 para. 1 FinIA from the first dayof trading (see Margin no. 12). There is no duty to report between the date of publicannouncement/launch and the first day of trading (the grey market period). Transactions executed during this period do not have to be reported after the fact on the firstday of trading.

Secondary offering

Yes

Where securities are placed directly with clients without the use of a nostro account,each client transaction must be reported separately. If the securities are first booked
to the securities firm's nostro account and only placed with clients in a second step,
two reports are required: one for the booking to the nostro account, another for theplacement with the client or third party.

Transactions outside a trading venue
during interruptions to trading

Yes

Transactions executed outside a trading venue are reportable, regardless of any inter- 65
ruption to trading.

Transactions outside a trading venue
while trading is suspended

Yes

Transactions executed outside a trading venue in securities that are suspended from 66
trading are reportable for the duration of the suspension.

Exchange of American Depository
Receipts (ADRs) for Swiss securities

No

Exchanging ADRs for Swiss securities does not entail a change in beneficial owner.

67

Transactions in securities provisionally admitted to trading

Yes

Securities that are provisionally admitted to trading are treated as having been admitted to trading (see Margin no. 8).

68

Transactions initiated by representative offices of foreign securities firms
in Switzerland

Yes

Either the representative office or the foreign securities firm itself must fulfil the duty to 69
report.

64

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Information

Duty toreportComments

Transactions between natural persons and/or legal entities without securities firm status

No

Transactions between natural persons and/or legal entities without securities firm status in which a participant or securities firm acts purely as
an intermediary

Yes

Transactions between two unregulated parties that involve a participant or securities
firm acting neither as buyer nor as seller must be reported once by the participant or
securities firm.

Intermediation of transactions in securities and derivatives with securities as their underlyings between clients where the intermediating participant or securities firm buys the position from one client and sells it to another clientYes

In this case, the participant or securities firm executes two transactions (purchase and 72
sale) and must therefore submit two reports.

Transactions executed by independent asset managers with securities
firm status

Yes

A licensed securities firm operating as an independent asset manager is subject tothe duty to report.

Direct orders from clients of a thirdparty bank to participants of a trading
venue

Yes

Depending on the type of transaction concerned, the trading venue participant reports 74
either automatically using the trading venue’s systems or via appropriate third-party
systems. The participant or securities firm that maintains the account or custody account is also required to report (see Margin nos. 12-14 and 80).

Orders from group companies

Yes

Transactions due to orders received from other group companies (e.g. a parent company or subsidiary) must be identified as client transactions with the participant or securities firm as agent.

70

71

73

75

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Information
Merger of participants or securities
firms (share exchange, cash payment of fractions)H.

Duty toreportNo

Comments
When participants or securities firms merge with each other, there is no duty to reportin respect of the shares exchanged. The remaining fractions from the share exchange, which are paid out in cash, are also not covered by the duty to report.

76

Miscellaneous

Duty to report/record-keeping duties

Participants and securities firms must fulfil the record-keeping duties under Article 38 77
FinMIA in conjunction with Article 36 FinMIO and Article 51 para. 1 FinIA in conjunction with Article 75 FinIO irrespective of the duty to report. These are more stringent inthat securities that are not admitted to trading on a trading venue in Switzerland mustalso be recorded in the journal (see FINMA Circular 08/4 “Securities journals”).

Verifying reported transactions

Responsibility for fulfilling the duty to report in terms of content, deadlines and compli- 78
ance with the legal requirements always lies with the participant or securities firm. Audit firms verify compliance with the duty to report in accordance with FINMA
Circular 13/3 “Auditing”.

Delegation or outsourcing of the
duty to report

A participant or securities firm may delegate or outsource its duty to report to a third
party. If this third party is also a participant or securities firm and is simultaneously
tasked by the delegating or outsourcing participant or securities firm with forwardingtransactions in securities or in derivatives with securities as their underlyings, it must
submit two reports for each transaction: one for itself and one for the delegating or
outsourcing participant or securities firm.

79

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Information
Reportable priceDuty toreportComments
In principle, the price actually achieved on the market must be quoted in order to fulfil
the duty to report.

80

Net transactions: A net transaction is one where the price charged to the client includes all fees and commissions. For net transactions, the amount after deduction of
all fees and commissions must be reported as the price. Where a participant or securities firm acts as an intermediary in a transaction between two clients on a commission basis, the mid price may be charged and reported, provided that the same fees
and commissions are charged to both clients. In all other cases, the reportable price iscalculated by deducting the client-specific fees and commissions from each of the two
net prices.

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List ofmodifications

The references and terms were adjusted upon the entry into force of FinIA and FinSA on 1 January
2020.

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