Focus on financial market infrastructures

The systemically important financial market infrastructures (FMIs) SIX x-clear and SIX SIS fulfilled all requirements for the approval of their recovery plans in 2022. FINMA therefore approved both plans for the first time without conditions. FINMA also investigated the timelines for actions in resolution for SIX x-clear and carried out dedicated information gathering for SIX SIS in order to develop a resolution strategy.

Recovery planning

After FINMA had approved the recovery plans of the central counterparty SIX x-clear (CCP) and the central securities depository SIX SIS (CSD) for the first time in 2021 subject to conditions, the focus in the year under review was on fulfilling these conditions. Both systemically important FMIs improved their plans compared with the previous versions in line with FINMA’s requirements and implemented the previously announced enhancements to their recovery measures in a targeted manner. The plans show how the two FMIs would stabilise their operations in a crisis to maintain their systemically important business processes.

The starting point is a risk analysis, based on which the FMIs evaluate potential stress scenarios, draw up a portfolio of remedial measures and analyse what needs to be put in place to implement these measures and the resultant implications. Regarding the contractually agreed recovery measures customary in the industry for CCPs – the success of which depends on their legal enforceability – SIX x-clear provided the required evidence. In addition, both FMIs have prepared recovery measures in place that they can implement at their sole discretion and independently of the parent company SIX Group and third parties. FINMA therefore approved the plans without conditions in the year under review.

Resolution planning

FINMA’s preferred resolution strategy for SIX x-clear is to temporarily continue the systemically critical functions for a maximum of six months to enable an orderly wind-down of operations. Depending on the crisis scenario, various instruments can be used in the event of resolution to impose losses or recapitalise the company to enable a wind-down. As part of the revision of the Financial Market Infrastructure Act (FinMIA) commissioned by the Federal Council in the year under review, the regulatory requirements for implementing the resolution strategy are to be established. This relates in particular to creating a legal basis for CCP-specific resolution tools. For SIX x-clear, FINMA further looked in particular at the timelines for actions in a crisis and the resultant implications. Various other prerequisites for implementing the preferred resolution strategy still need to be put in place.

For the central securities depository SIX SIS, FINMA, in cooperation with SIX SIS and the SNB, has focused specifically on the services to be continued in resolution and the evaluation of potential resolution scenarios and suitable resolution instruments. This work forms the basis for the definition of an appropriate resolution strategy.

At an international level FINMA participated in further work on the financial resources of central counterparties in resolution.