Since January 2018 Jos Dijsselhof has served as the CEO of SIX. The Dutch national holds degrees in computer science and business administration, and has extensive international managerial experience in the financial industry. His career path led him to locations including Hong Kong and Singapore in his previous work for ABN Amro Bank, Royal Bank of Scotland, and ANZ Australia & New Zealand Banking Group. Prior to joining SIX, from 2014 through June 2017 Dijsselhof was the Chief Operating Officer of Euronext in Amsterdam, where he also served as the interim CEO in 2015.
We’re meeting here in the runup to Sibos. You attended the annual trade event for financial service providers in 2018 as the new CEO of SIX. What are your memories of the convention?
A year ago, the transformation at SIX was a big topic. So Sibos came at an opportune time toward the end of my first year in office. We had strategically realigned SIX and had launched the SIX Spirit program aimed at instilling our corporate culture in our employees. One naturally meets many old acquaintances at an international event. Everyone there asked me how I liked Switzerland and my new job, but also wanted to hear about the strategy and culture at SIX. It was the perfect moment to show what SIX is made of.
How did you reply?
I, of course, said that Switzerland was very beautiful and I liked my job. But, jokes aside, I mainly gave an account of my vision for SIX, describing how we would orchestrate the reshaping of Switzerland’s financial industry and actively promote digital transformation with innovative services. But what I intend to recount this year is far more interesting: I’ll be pointing out how far we’ve already come on this path. Because, believe me, neither my acquaintances nor our clients will allow me to palm off the same response as last year’s.
And, how far have you gotten?
The year 2019 has shown that we’re not just on track, but on the right track. We have already reached a number of milestones, with more to come by year-end. Let me give you just a couple of examples of how we, with our innovations, have enhanced our clients’ competitiveness this year and will further strengthen it going forward. The managed security services offered by our Security Operations Center are now up and running, giving small and mid-size companies in the financial sector access to highly sophisticated cybersecurity solutions that otherwise only larger companies can afford. Our threat intelligence platform currently has more than 20 users.
Our digital exchange SDX is proceeding on schedule. I’m delighted that at Sibos we’ll be holding presentations about SDX at our stand, where we will show a simulation of how fully integrated digital trading, settlement, and custody works. Our clients will also get to see how our Collateral Cockpit will revolutionize collateral management.
This year’s Sibos is being held in London. How important is the presence of SIX there?
London also is one of the 23 branch offices that SIX operates outside Switzerland. These offices are important, in part because that’s where we run our international financial information business. The series of milestones that I began to tick off earlier continues here, for example with our Sanctioned Securities Monitoring Service, which is proving very popular with our clients in the midst of the ongoing geopolitical turmoil. In general, we have repeatedly succeeded in creating customer value out of complex and confusing regulatory situations, as evidenced by our recently launched watchlist for securities connected with marijuana-related businesses.
While we’re on the topic of London, we can hardly get around talking about Brexit.
I’ll leave commenting on Brexit to the British. But as a Dutchman working in Zurich, I definitely have an opinion on relations between Switzerland and the EU, all the more so since the Swiss stock exchange has been center stage in recent months in the debate about the proposed institutional agreement with the EU. The EU put pressure on Swiss policymakers by announcing that it would not extend the recognized “equivalence” status of the Swiss stock exchange.
But let’s face it: The draft institutional agreement is not a bilateral treaty anymore, but rather has the potential to become much more than that due to its dynamic nature. I understand that many Swiss citizens see their sovereignty and direct democracy in danger. And initiatives like the platform for open banking from SIX demonstrate that Switzerland is capable of establishing reasonable standards on its own without regulatory compulsion by the EU, in this instance the PSD2 payment services directive.
In any event, the Swiss must carefully weigh their decision on the institutional agreement. As a citizen of the EU, I envy this pivotal moment of democracy. I’ve heard cogent arguments on both sides and sense solemn earnestness. Democracy takes time. It would be good of the EU to grant this time to the oldest democracy on the continent.
The EU, in fact, did not extend the recognized “equivalence” status of stock exchanges in Switzerland.
This activated a protective measure on 1 July 2019: a Swiss Federal Council ordinance prohibiting trading in Swiss equity securities on venues in the EU. That shifted the trading volume in Swiss stocks in the EU to our exchange. The switch went absolutely smoothly. But regaining EU recognition of equivalence, for which Switzerland’s exchange regulation fully meets all technical specifications, remains our highest priority. In order to continue to ensure legal certainty and satisfy investors’ needs for transparent and effective open markets, we closely coordinate our activities with the Swiss authorities and support them in their efforts.
Measured in terms of free-float market capitalization, the Swiss stock exchange is the fourth-largest in Europe. Congratulations!
Three of the five companies with the largest market capitalizations in Europe are listed on our exchange, and we’re proud of that. But the Swiss stock exchange is more than just a trading venue for Nestlé, Roche, and Novartis. We continue to be the platform for big and small companies looking for capital. Shares in around a hundred companies with market caps ranging between CHF 100 million and CHF 1 billion also get traded here. That’s the beauty of the Swiss stock exchange.
Switzerland’s economy is substantially smaller than Germany’s economy, but the market capitalizations of the two countries’ equity markets are similar. Switzerland thus has an extremely strong capital market in relation to its gross domestic product.
What makes it so successful?
Its success has many reasons, and I’d like to stress a couple of them here. The financial sector is a major driving force behind the Swiss economy. Around CHF 6 trillion of assets are managed in Switzerland. The capital-rich investor base creates a good environment for company listings. In addition, the Swiss capital market is highly efficient and fast. After submitting a listing application, a decision is made within a maximum of four weeks.
It’s therefore no surprise that we attract companies of different origins, sizes, and sectors. So far this year, the Swiss stock exchange has seen four company listings with a total transaction volume of CHF 2.3 billion. The IPO by Stadler Rail was one of the biggest in Europe. The IPO by Medacta and the listing by Alcon testify to our expertise in the life sciences market. We represent around 40% of the capitalization of this market across Europe’s major stock exchanges. And, of course, we benefit from the fact that Switzerland ranks among the most competitive countries on the planet, as the World Economic Forum’s Global Competitiveness Report attests year after year.
But another reason is the most important one of all: SIX and the Swiss stock exchange have never stood still. Innovation is in our DNA. I’ve already mentioned what we’ve achieved this year alone, but I also think back to the year 1996, when the Swiss stock exchange migrated all equity trading to a fully electronic platform, thus replacing open outcry trading. New York wasn’t the first to do that, nor was London or even Tokyo – Zurich was.
Today, we rank among the industry pioneers that aren’t just talking about artificial intelligence, but are also putting it to use, for example to handle post-trading support requests and financial information queries.
Innovation is great, but doesn’t SIX stand first and foremost for stability?
Our stability and reliability are crucial, and they lay a rock-solid foundation for the next level of SIX. Nevertheless, I expect us to critique our processes and to continually improve the way we provide our services today. We also need to add more services. The message is clear: We want to grow. We’ll do that by pursuing new ideas and exploring new technologies, but perhaps also by working with additional strategic partners and through acquisitions.
Above all, however, we have to “deliver, deliver, deliver,” as I’m always saying. In other words, we have to make good on the promises we made a year ago at Sibos.
SDX: Becoming the World’s Leading Exchange for Digital Assets
SIX is building the world’s first fully integrated platform for the trading, settlement, and custody of digital assets in a secure and regulated environment. On the SIX Digital Exchange (SDX), trading and settlement will no longer be separated. They will operate in the same cycle, allowing riskless trading. Every matched order will be settled instantly. Delivery and payment happen simultaneously. Currently this process takes two days. Riskless trading effectively means that there is no need to mitigate risk and, potentially, no need for clearing as a function.
By immutably linking digital assets and digital money with ownership claims, SDX aims to set the global standard for tokenization. All asset properties are captured directly in the token – a single source of truth. The commercial opportunity is to establish new asset classes (e. g. difficult-to-trade assets and non-bankable assets like real estate or paintings) in the form of asset tokens.
SDX is purely focused on a B2B model. With SDX operating as a fully regulated financial market infrastructure, encompassing an exchange and a central securities depository, its clients will have to fulfill certain criteria to obtain direct membership.
The result of SDX will be greater transparency, reduced counterparty risk, and significant efficiencies.