Mr. Riesen, Mr. Tschirky: What was the significance of being admitted as a stock exchange agent for Rahn+Bodmer Co. in 1923?

Paul Tschirky (PT): Rahn+Bodmer Co. became part of the stock exchange community, which was a rather exclusive circle 100 years ago. Being a member of the stock exchange came with a certain status. And, of course, it also brought very tangible advantages: Members of the exchange do not need intermediaries to trade securities for their clients.

Markus Riesen (MR): In addition to status and credibility, direct access to the market, where supply meets demand and the value for a security is transparently determined, was certainly important. At that time, all securities were traded at the ring by open outcry – that was a very special, very tight-knit community.

Laurent Lefèvre, Head Delivery Capabilities, SIX

Direct access to the market, where supply meets demand and the value for a security is transparently determined, is key.

Markus Riesen, Head of Trading at Rahn+Bodmer Co.

So being a member of the stock exchange was a selling point for a bank to customers back then?

MR: Not only back then, it remains an important argument today. For us, it's not so much about the speed of executing orders, but above all about discretion. If you were to go through another bank, you would have to explain, for example, which strategy you wanted to pursue and for what reasons. As a direct member of the stock exchange, the needs and wishes of our customers remain with us. That's still the case today; if possible, you don't want to show what your intentions are and thus avoid possibly influencing the share price to the disadvantage of your own customers.

PT: Some customers choose their bank based on whether or not it is directly listed on the stock exchange. Being a member of the stock exchange went hand in hand with a considerable reputation, then as now. 

What were the requirements for being admitted to the exclusive circle of stock exchange traders in 1923?

PT: It was definitely a great honor and crucial for the reputation of a bank. It was also necessary to be authorized by the supervisory authority, which at that time was presumably the Directorate of National Economy. The ring only had a certain number of places, which were therefore very coveted.

MR: There were a lot of banks in Zurich at that time. Switzerland was becoming more and more important as a financial center. And, of course, the existence of a stock exchange played a major role in this. It was a special honor to be a member of this exclusive circle. 

How does one have to picture trading on the ring back then?

MR: There were various trading rings, for example for industrial stocks, financial stocks or foreign stocks, as well as various other trading rings. A trader from Rahn+Bodmer Co. was present at each of these rings. They lived strong emotions, such as anger, annoyance or joy and satisfaction. The noise level, the tingling on the skin before trading started was something special. One entered the ring and already smelled, so to speak, where the trend was going to go. In addition to that, there was a spectator stand, so that gave the traders a certain additional status: they were like stars on a stage.

PT: The atmosphere at the ring was certainly special. All the emotions, the tension in the air, which in a certain sense also conveys information, you could only experience as a member of the exchange. But it was also a very demanding job. The information had to be grasped immediately, understood and acted upon at the right moment. The traders on the ring had to be awake and ready at all times.

MR: Of course, that was also true for female traders: Although open outcry trading was a male domain for decades, in the last years of trading at the ring, before the switch to electronic trading, you also saw some female traders negotiating buy or sell orders from their clients.

Until when was trading conducted at the ring?

PT: In Zurich until 1995, there was still securities trading on the ring in Basel and Geneva. But by 1996, this type of trading, à la criée, was definitely a thing of the past in all Swiss cities. At that time, the Swiss stock exchange was the first in the world to convert the entire value chain – i.e. trading as well as settlement and custody of securities – to a fully electronic system. To this day, we employ leading trading technology to reliably fulfill our function as a stock exchange at all times.

Laurent Lefèvre, Head Delivery Capabilities, SIX

We employ leading trading technology to reliably fulfill our function as a stock exchange at all times.

Paul Tschirky, Senior Relationship Manager, SIX Swiss Exchange

Does SIX Swiss Exchange have a monopoly on trading Swiss shares?

PT: Not at all, there are various ways to execute orders. But with a current market share of around 67% compared to alternative trading platforms, we are in a very good position by international standards. Enabling price formation and capital raising are an important part of our mandate to the financial market and the Swiss economy as a whole. That is why we take our responsibility as a reference exchange very seriously. 

MR: The decisive factor for us is that SIX Swiss Exchange also conducts the morning and evening auctions. These are very important instruments for us and our customers in terms of price formation. The Swiss stock exchange still has a certain leading position in these auctions. 

The digital transformation has changed exchange trading enormously over the last decades. In which direction will the journey continue?

PT: Already today, trading is predominantly carried out via so-called algo trading programs. Algorithms are predefined instructions that execute an order based on rules. The most common algorithms are Volume weighted avarage price, VWAP for short, and Time weighted avarage price, TWAP for short. But there are countless others that are constantly being developed and improved. That's why the speed of data processing to handle volumes is the main challenge. At peak times, we already process around 10,000 trades per second. And that’s not what our capacity is limited to.

MR: Today, the whole world is talking about artificial intelligence. What we observe is that order books are changing much faster. Different algorithms have been used in securities trading for several years now. They are becoming smarter and smarter and will probably gain the ability to continuously evolve themselves. We use our systems to support them, but the decision-making power remains largely with our traders.

What is SIX Swiss Exchange doing to remain attractive to its stakeholders?

PT: We invest a lot in our systems and functionalities so that they function reliably and don’t fail, not even in stressful situations. While up to 10,000 trades that are executed in one second, there are about 40 to 50 times more entered in the order books. So you can imagine how important it is for a stock exchange to offer both fast and stable systems. High-performance technology is our life.

MR: Continuity is also something very important. That is always underestimated. Continuity is of enormous importance, especially for our customers.

PT: We feel a great responsibility to constantly adapt our services to the needs of our members. We do everything we can to maintain and also expand our market share. To this end, we are in constant dialog with our trading participants.

MR: That's right. That's important for us as a rather small bank; we want to be taken seriously. SIX Swiss Exchange is innovative and must remain so. That way, it remains attractive for market participants to trade their securities on the Swiss stock exchange.

 

Laurent Lefèvre, Head Delivery Capabilities, SIX

SIX Swiss Exchange is innovative and must remain so.

Markus Riesen, Head of Trading at Rahn+Bodmer Co.

What do you, Paul Tschirky, wish Rahn+Bodmer Co. for the coming years?

PT: We wish that this exceptional private bank will continue to be an active member of SIX Swiss Exchange. And that Rahn+Bodmer Co. can continue to be so successful in private banking and maintain its independence. These are achievements that cannot be taken for granted.

Discover how trading on the Swiss stock exchange looked like in 1930