SWX Swiss Exchange - Concrete Steps in the Direction of Internationalisation

For the SWX Swiss Exchange, 1999 represents the year of internationalisation. For the first time, foreign participants have commenced active trading on SWX. As a result of foreign investors' having been freed of Swiss stamp tax on Eurobond transactions as of 1 April, SWX Eurobonds has established itself as a bridge between interbank dealings in London and investors in Switzerland. Following a full year of product development, SWX initiated electronic trading in repurchase agreements in mid-June. And at a media conference on Friday, CEO Antoinette Hunziker-Ebneter announced that, by year's end, five new listings are planned. The internationalisation of SWX is becoming progressively more visible. At Friday's (September 3) media forum in Zurich, SWX Chairman Dr.Jörg Fischer drew attention to the fact that, in November of 1998, foreign "Remote Members" were accepted by the Exchange for the first time. Today, already 8 of the 71 SWX Member firms are domiciled in Great Britain or Germany, and two are trading out of Liechtenstein. Also a part of this internationalisation strategy is the establishment of co-operative relationships with other securities exchanges. Fisher noted that, in the case of Eurex, SWX joined together with Deutschen Börse AG to create the first, and at present only, existing international derivatives exchange. Within the scope of a co-operative agreement with the Paris Bourse, the first institutions to hold cross-membership - two situated in Switzerland and two in France - will commence dealings in October on the partner exchanges. The internationalisation of the securities exchange business however also carries with it the danger of trading volume in internationally recognised shares migrating to other marketplaces. Fischer pointed in this regard to the consequences of the stamp tax: "Exchanges that are not able to use the technological opportunities at their disposal in the best possible manner - for example, because the fiscal framework is not conducive to such - must face the likelihood that trading in domestic shares will migrate to other exchange systems." This process is already underway. During the first seven months of this year alone, 27 percent of the total turnover in Swiss shares was transacted in London. In 1996, that reading stood at only 14%. Antoinette Hunziker-Ebneter, Chief Executive Officer of SWX, voiced her conviction that the coming years will witness a great deal of change in the area of securities trading. With SWX Eurobonds and SWX Repo, the Exchange has opened up new market areas aimed at compensating for any possible drop-off in more traditional trading sectors. She also pointed out that SWX Repo is the only fully automated trading platform for what is currently the fastest-growing domain of the global financial markets. And the SWX New Market segment that was inaugurated by the Exchange several weeks ago enables young, rapidly-growing companies to obtain affordable financing via the Swiss capital markets. Speaking on the topic of "stock exchanges and the Internet", the SWX CEO noted that already roughly 23,000 Internet users call up the real-time quotes provided by SWX. In August, 11% of all SWX transactions were attributable to Internet traders who are automatically routed to the SWX Swiss Exchange via discount brokerage houses. "Thus SWX already is an Internet exchange", Ms. Hunziker-Ebneter observed. It was also announced at the media conference that the so-called "round lot" will be done away with. As of 18 October, orders involving the smallest deliverable trading unit will be treated in exactly the same way as large-scale orders. This new rule will apply to both stocks and bonds. For stocks, the smallest deliverable trading unit will generally be understood to mean one share. The elimination of round lots is a result of the new technologies that have brought individual investors closer to the securities exchanges, explained Chairman Fischer.