Laying down the Foundations

In 2014, SIX established its repo trading platform aimed at supporting the Swiss money market and its fully integrated value chain.

Not only did the repo trading platform underpin activities like liquidity management, but it was also used by the Swiss National Bank (SNB) to implement its monetary policy operations, auctions of federal bonds and money market book claims, succeeding a previous platform offered by a former SIX joint venture.

The platform operated by SIX was made available to Swiss and international financial institutions, and ensured that trading, securities settlement and payment processing was offered as a fully integrated solution from a single, centralised source in 14 currencies.

Getting to the CO:RE

In 2016, SIX went live with its new electronic trading facility – CO:RE (Collateral & Repo) - offering a single point of access to more than 160 domestic and international clients, including banks, major insurance companies and funds, who are active participants in the domestic multi-currency repo market.

This launch further cemented the company’s ascending position in the repo and securities finance world.

CO:RE replaced a lot of the legacy systems shoring up the repo market with upgraded technology and capabilities, together with new functionalities. In addition, CO:RE provided an enhanced real-time securities finance offering, bringing together trading and collateral management in a fully integrated value chain from trading right through to settlement and collateralisation at the Central Securities Depository (CSD) and custody level.

The solution also gave users the ability to monitor their collateral in real-time – with multi-day forecasting tools - further helping financial institutions with collateral management.

CO:RE Goes from Strength to Strength

In 2017, FINMA approved the request of SIX for its CO:RE trading platform to be designated as a multilateral trading facility (MTF).

The Collateral Cockpit™ Takes Centre Stage

In 2020, SIX launched its Collateral Cockpit™, a technology interface designed to join up fragmented front and back office information systems, thereby giving repo market participants the ability to view, manage and optimize their collateral in real time on a single platform.

Historically, collateral management was a convoluted process.

For instance, collateral was often managed across the front and back office through a byzantine network of systems developed by a range of different technology providers. This complexity and lack of visibility meant manual intervention was frequently required to prevent operational errors from happening.

These issues have since been remedied by the Collateral Cockpit™, as it enabled both automation and transparency, by giving users a holistic view across all of their collateral processes and activities.

Taking Collateral Management up a Notch

As a next step in its path of innovation, in 2022, SIX unveiled its renewed Triparty Collateral Management (TCM) solution, complementing its existing Triparty Agent (TPA) and Collateral Cockpit™ solutions.

When using the TCM service, two parties to a transaction delegate their day-to-day operational responsibilities around collateralisation to SIX. The SIX TPA then performs tasks such as the selection and automatic execution of collateral transfers and ongoing validation that exposures are being appropriately collateralised through multiple daily mark-to-market checks during the transaction lifecycle.

This service creates additional opportunities for clients by helping them reduce operational risks and costs. By leveraging TCM in conjunction with Collateral Cockpit™, users can monitor their exposures and margin calls in real time, while also benefiting from having simplified collateral management processes, like easily substituting collateral position with few clicks.

Move to SARON

In the aftermath of the rate rigging allegations, LIBOR – which was the reference rate for a number of currencies including the Swiss Franc – ceased to exist and was replaced with SARON. Leveraging the power of our diverse business areas, SIX has also closely collaborated with the Swiss National Working Group on the LIBOR replacement – and nowadays the Swiss Reference Rate SARON is calculated based on the interest rates from repo transactions on SIX’s CO:RE trading platform and the associated information distributed across the world by SIX Financial Information.

What Do the Next 10 Years Hold?

  • The local market gets bigger

Volumes in the SIX repo market are expected to grow further, and this is likely to trigger even greater global participation in the already international market.

Although a number of non-Swiss institutions (I.e. entities from UK, Germany, Denmark etc.) are present on the repo market, it is expected that more organisations from further afield will join them, including potentially additional Central Banks, insurance companies, pension funds, and fund management groups.

  • Collateral mobility becomes more important

Over the last few years, the industry has faced collateral shortfalls, sparked by Central Bank Quantitative Easing policies and post-financial crisis regulations, such as Basel III and Solvency II, both of which subject financial institutions to risk weighted capital requirements.

The hunt for high quality liquid assets (HQLA) was also intensified following the introduction of mandatory Over-the-Counter (OTC) derivative clearing rules and margining requirements for uncleared or bilaterally traded OTCs.

As Central Banks wind down their balance sheets and financial institutions become more accustomed to these regulations, fears about collateral scarcity have eased, but organisations are all too aware that they need to have efficient collateral management processes in place.

The ability to mobilise collateral as quickly as possible will be critical for firms moving forward.

  •  Transparency into Securities Finance Transactions (SFTs) will only grow

Introduced in 2016, the Securities Financing Transaction Regulation (SFTR) required financial institutions to report details of their SFTs (i.e. repos, securities lending, securities borrowing, margin lending, etc) to trade repositories. With the integrated SFTR reporting service for repo transactions on the CO:RE trading platform and its investment in REGIS-TR, SIX is well positioned to be a supporting partner for its clients.

With regulatory reporting becoming increasingly ubiquitous more generally, SFTs and repos could yet face added scrutiny.

  • Repo will continue to undergo a digital transformation

SIX is playing an instrumental role in the digitalisation of financial markets, including repo, and, together with partners, is actively supporting initiatives in the space of digital securities transactions. On its repo trading platform CO:RE, SIX has seen the first repo transactions using digital native assets as collateral in early 2023.

Having been at the forefront of innovation in the repo market since 2014, SIX has every intention of staying the course over the next decade and beyond.

With this occasion, we would like to thank our clients and partners for being part of this incredible story. We are looking forward to the exciting journey ahead and welcome all companies that would like to join the SIX repo market.

Find out more about our Repo offering: