By Simon Miller
The Swiss government is tightening the rules for OTC trading, bringing it into line with US and European efforts following the financial crisis in 2008.
The Federal Council has decided to introduce new legal provisions for OTC derivatives trading while financial market infrastructure regulations will also be amended.
The Federal Department of Finance has been instructed to prepare a draft consultation paper by spring 2013.
The Swiss government said the financial crisis highlighted how the lack of transparency on the markets for OTC derivatives could threaten the stability of the entire financial system due to their strong international integration and the heavy trading volume and default risks.
Since then, international efforts have been afoot, in particular undertaken by the G20 and the Financial Stability Board to improve transparency and stability in the OTC derivatives market.
"The existing Swiss regulation of financial market infrastructure is no longer appropriate given the developments on the financial markets," the government said in a statement.
It continued: "Furthermore, it also no longer satisfies the new standards developed by international bodies for important financial market infrastructure institutions such as trading platforms, central settlement offices, securities depositories or trade repositories."