In a move aimed at aligning with international standards and mitigating competitive disadvantages for Swiss market participants, the Swiss Financial Market Supervisory Authority (FINMA) has announced an extension of the transitional period for the exchange of collateral in certain over-the-counter (OTC) derivative transactions. The new deadline, set for January 1, 2029, applies to non-centrally cleared OTC derivatives, specifically options on individual equities, index options, and similar equity derivatives such as those on baskets of equities.
Under Article 107 paragraph 1 in conjunction with Article 110 paragraph 1 of the Financial Market Infrastructure Act (FinMIA) of June 19, 2015, there is a general duty to exchange suitable collateral for OTC derivatives not cleared through a FINMA-authorized or recognized central counterparty. However, FINMA has previously extended the transitional period under Article 131 paragraph 6 of the Financial Market Infrastructure Ordinance (FinMIO) multiple times, with the most recent extension running until January 1, 2026. This latest extension, detailed in FINMA Guidance 04/2025 issued on October 9, 2025, builds on those prior adjustments.
The decision comes in response to evolving international regulations. In the European Union, the equivalent transitional period has been replaced with an indefinite exemption under Article 11 paragraph 3a of Regulation (EU) No 648/2012 (EMIR), though a potential reintroduction remains possible based on market developments. The United Kingdom maintains a similar transitional arrangement, with discussions underway for a long-term exemption. FINMA’s extension seeks to prevent undue burdens on Swiss derivatives traders, ensuring parity in a global marketplace.
Beyond the extension, FINMA advocates for a permanent regulatory solution during the ongoing FinMIA revision process, one that harmonizes with these international shifts. In the interim, supervised institutions engaged in derivatives trading must adhere to applicable risk management requirements. This includes evaluating and mitigating risks associated with trading options on individual equities, index options, or similar equity derivatives.
This guidance reinforces FINMA’s commitment to prudent oversight while fostering a competitive environment. As global financial markets continue to integrate distributed ledger technology and adapt to post-crisis reforms, such measures highlight the need for flexible yet robust regulatory frameworks. Market participants should review their operations to ensure compliance with ongoing risk management obligations, even as the collateral exchange requirement remains deferred.
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Original source: FINMA News Release
