Collateral Secured Instruments (COSI) with collateral providers from theUK can now be listed on SIX Swiss Exchange, which marks another milestone in the internationalization of the COSI service. COSI is an innovative service for minimizing issuer risk with structured products. COSI products are traded exclusively on Scoach Zurich and Frankfurt.
COSI is an innovative service for investors and is a collaboration betweenSIX Swiss Exchange, SIX Securities Services and Eurex Zurich.
The launch of the COSI segment has proven to be a fitting response to changing investor requirements in light of the financial crisis. The service, which won several national and international awards, is based on a sophisticated process, which ensures that the investor's claims are adequately collateralized at any given time.
There is growing interest from several European and Asian markets in the Swiss collateralization mechanism. SIX Swiss Exchange has now taken a large step towards meeting this demand: for the first time, it is possible to offer this service to issuers with foreign collateral providers.
If the issuer or the collateral provider were to go bankrupt, it must be ensured that the collateral can be realized as quickly as possible to reimburse investors. In the event of collateral having to be realized, it is important that the COSI collateral is recognized in the security provider's country of origin. A solution was developed together with the Swiss Structured Products Association (SSPA), which guarantees that the high standards of the COSI mechanism are also valid in an international context. The legal adjustments necessary to accommodateUK collateral providers and the changes to operational procedures have no impact on the rights of the investor. Investors in COSI products benefit from the same level of protection from issuer risk, regardless of the collateral provider'splace of domicile.
The first issuers with a UK collateral provider are expected to begin using thisservice in the next few months, while clarifications are still being carried out for further jurisdictions.
Christian Katz, CEO SIX Swiss Exchange, commented: "We have carefully been working on the proper approach to make COSI accessible to international collateral providers. The quality of COSI is one of a kind anywhere in the world and has attracted a correspondingly high degree of interest. However, we had to ensure that the COSI collateral mechanism will also work properly at an international level. The first step has now been taken with the connection to the United Kingdom. UK issuers can now list COSI products at SIX Swiss Exchange more easily, as they can use a UK collateral provider to deposit the necessary collateral with SIX Securities Services in Switzerland. This stimulates and expands the market. Investors are offered additional opportunities to invest with the best possible protection from issuer risk."
Additional information on the COSI service is available via the SIX SwissExchange website: http://www.six-swiss-exchange.com/issuers/services/cosi_en.html
