The clearing procedure and the involvement of a central counterparty offer the following advantages
to participants on the SIX Swiss Exchange:
Post-trade anonymity
Counterparty anonymity is guaranteed in the case of Swiss blue chip trades.
In the case of small or mid-cap and bond transactions, the identity of participants on
the SIX Swiss Exchange is, however, disclosed. This does not alter the contractual nature of trades that have
already been executed.
This change to the traditional, anonymous CCP model facilitates the efficient execution
of large trades in less liquid securities.
Risk management
A central counterparty is interposed between every buyer and seller, thus
minimising counterparty risk for participants and simplifying risk management.
The CCP takes a range of measures to mitigate risk for participants, including:
Risk-based margining
Default funds
Insurance to protect itself and the market from default on the part of participants
Settlement netting
The CCP is the single counterparty for every participant, enabling them to net trades with
multiple trading counterparties in any one security with only one settlement per day.
For the participant, this has financial benefits:
Restriction in the number of settlements, hence a reduction in settlement costs
Reduction in back-office overhead
Decrease in operational and counterparty default risk
The delivery versus payment principle continues to apply, since netting is on a multilateral
basis against the central counterparty.
For detailed information about the central counterparty service, including the benefits of clearing,
please consult the CCP Member Service Description.
