Swissbanking Fmia Agreement

There is no common practice. As a general rule, legal advice on the conclusion of a framework contract and not on the conclusion of derivatives transactions is sought. However, in the case of complex structured over-the-counter derivatives transactions, which are the case of opposability, and in the case of a publicly traded underlying capital instrument, advice on disclosure obligations is quite common. Over-the-counter derivatives trading commitments are primarily implemented by the Amfederal Act on Financial Market Infrastructure and Market Conduct in Securities and Derivatives Trading of June 19, 2015 (FMIA), which came into effect on January 1, 2016 and was last amended on January 1, 2020 with effect on January 1, 2020. The IMFA is conceived as a framework law which provides, in addition to the usual enforcement powers conferred on the Federal Council, a complete transfer of powers to both the Federal Council and FINMA, the regulatory authority. While a financial market infrastructure is of systemic importance, the Swiss National Bank (SNB) is the supervisory authority. With regard to derivatives trading, the IMFA imposes a number of obligations on Swiss counterparties, namely trade relations; Compensation several risk mitigation obligations, including portfolio voting, agreement on dispute settlement mechanisms and obligation to exchange guarantees (initial margin and margin of variation) for OTC derivatives transactions that are not covered by clearing; and that they still need to be used in a binding way. However, the IMFO limits the application of this alternative compliance regime to domestic transactions by requiring that counterparties or transactions be linked to the foreign jurisdiction whose rules apply. Although a simple choice of the law is not sufficient in a master`s contract, we believe that this condition is met when a consideration belongs to a group of significant transactions in the foreign jurisdiction or when derivatives relate to underlying instruments or currencies related to such jurisdiction. The main advantage of using such a high-level agreement for counterparties who have already complied with a 2013 EMIR Portfolio Reconciliation Protocol, Resolution and Disclosure Protocol, is to maintain processes that meet the requirements of the FMIA. Counterparties may also consider concluding the IMFA agreement published by the Swiss Banking Association, which provides for a portfolio voting procedure, a dispute resolution procedure and an exchange of confirmations in accordance with the rules of the FMIA. In addition, unlike the ISDA documentation, the FMIA agreement provides for a self-classification letter that can be used by all counterparties for the classification itself. However, we find that at this stage, none of these agreements are attacking margin rules.

Finally, some large companies have developed ad hoc documentation to define IMFA procedures that apply exclusively to their relationship with a given counterparty. This documentation is usually tailor-made. The extension agreement is intended to allow counterparties who have already entered into a voting, dispute resolution and disclosure protocol on the EMIR 2013 portfolio to comply with their requirements under the FMIA. By entering into such an endorsement, which is a bilateral agreement as opposed to the underlying protocol, the parties agree to include the voting and dispute resolution provisions in the IMFA portfolio and/or a confidentiality clause to report under the FMIA under the 2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure ACCORD ON THE IEM PORTEFEUILLE.