Supervision and regulation

SIX Group both regulates other entities and is subject to regulation itself. In stock market trading, SIX Group carries out extensive supervisory activities over issuers and participants as part of the self-regulation process. As SIX Group is of systemic importance for the Swiss financial center and some of its entities have bank status, the company must also fulfill a great number of requirements relating to supervision and regulation by the Swiss Financial Market Supervisory Authority (FINMA) and the Swiss National Bank (SNB).

SIX Exchange Regulation is the organization within SIX Group responsible for independent supervisory functions. The unit regulates and monitors issuers and participants of SIX Swiss Exchange, Scoach Switzerland (exchange for structured products) and Eurex Zurich Ltd (exchange for standard derivatives).

Under Swiss Stock Exchange Law, stock exchange organizations must be regulated in accordance with internationally recognized standards. For securities listed on SIX Swiss Exchange and Scoach, SIX Exchange Regulation checks whether they meet the regulatory requirements to be granted approval and monitoring compliance by issuers (for example with respect to ad hoc publicity, management transactions, corporate governance disclosures or financial reporting) and participants in terms of their trading activities.

As an independent organization, SIX Exchange Regulation reports directly to the Chairman of the Board of Directors of SIX Group.

SIX Exchange Regulation's activities adhere to the principle of self-regulation required by law. This means that a private organization, rather than government authorities, is responsible for issuing, implementing and monitoring regulations in accordance with federal legislation. This organizational structure comprises not only SIX Exchange Regulation, which is responsible for enforcing regulations (executive), but also the Regulatory Board, which sets regulations (legislative), and the judicial authorities - the Sanction Commission, the Appeal Board and the Board of Arbitration (judicial). The Swiss approach combines the benefits of market proximity, widespread acceptance, flexibility and efficiency. The legal framework is underpinned by the Stock Exchange and Securities Trading Act (SESTA) and ultimate supervisory authority lies with the Swiss Financial Market Supervisory Authority (FINMA).

System supervision by the Swiss National Bank (SNB)

SIX Group manages payment and securities settlement systems that are of crucial importance to the stability of the Swiss financial system and are supervised by the Swiss National Bank. The legally regulated supervisory activities aim to prevent operational or technical problems with these systems leading to serious credit and liquidity problems for financial intermediaries and such problems spreading throughout the system to other financial intermediaries.

The following SIX Group systems are subject to supervision by the National Bank:

• The SIC (Swiss Interbank Clearing) interbank payment system is the central Swiss payment system used by leading financial institutions to process large payments and some mass payment transactions in Swiss francs. SIC is operated by SIX Interbank Clearing on behalf of the National Bank.
• The SECOM (Settlement Communication System) securities settlement system, another core element of Switzerland's financial market infrastructure, processes and settles both domestic and international securities transactions. Financial market transactions on SIX Swiss Exchange are settled automatically via SECOM with the minimum risk. SIX Securities Services (SIX SIS Ltd) has operational responsibility for the system.
• SIX x-clear Ltd, the central counterparty of SIX Securities Services, eliminates any counterparty risk that may arise in trading transactions on the stock exchange. It assumes liabilities that arise and guarantees that they will be fulfilled. In addition, the company holds, values and clears trading positions and initiates settlement on the fulfillment date. SIX x-clear Ltd carries out these activities for equities and exchange traded funds (ETFs).

Institutional supervision by FINMA

SIX SIS Ltd, the Swiss organization responsible for the settlement and safekeeping of securities, and SIX x-clear Ltd both have bank status and must therefore comply with the requirements imposed on banks in Switzerland. This includes provisions relating to capital adequacy and risk distribution.

While SIX Group as a whole is not subject to banking and stock exchange regulation, given its importance, FINMA considers it to be a financial group within the meaning of the Swiss Banking Act; with certain exceptions, it is therefore subject to institutional supervision. This means that not only for the units in question, but for the Group as a whole, the guarantors and internal organization, the organization and competency regulations, and the risk controlling and risk management regulations are subject to approval by FINMA.