Ordinance
on Financial Market Infrastructures and Market Conduct in Securities and Derivatives Trading
(Financial Market Infrastructure Ordinance, FinMIO)

(Art. 110 Fin­MIA)

¹ No re­cip­roc­al off­set­ting may ap­ply to ini­tial mar­gins.

² Ini­tial mar­gins paid in cash must be held with a cent­ral bank or a Swiss bank in­de­pend­ent of the pay­ing coun­ter­party or an in­de­pend­ent for­eign bank sub­ject to ap­pro­pri­ate reg­u­la­tion and su­per­vi­sion.

³ Ini­tial mar­gins not paid in cash may be held by the re­ceiv­ing coun­ter­party or by a third party man­dated by the coun­ter­party. The third party may be the pay­ing coun­ter­party.

⁴ The use of ini­tial mar­gins for oth­er pur­poses is not per­miss­ible. This does not ap­ply to the re­ut­il­isa­tion of ini­tial mar­gins paid in cash by a cus­todi­al third party, provided it is con­trac­tu­ally en­sured that the re­ut­il­isa­tion does not ad­versely af­fect the se­cur­ity and its us­ab­il­ity.

⁵ The re­ceiv­ing coun­ter­party and the cus­todi­al third party must keep the non-cash ini­tial mar­gins re­ceived sep­ar­ate from their own as­sets and con­clude a se­greg­a­tion agree­ment. This shall pre­scribe in par­tic­u­lar that:

a.

the ini­tial mar­gin pay­ment should be im­me­di­ately avail­able to the re­ceiv­ing coun­ter­party in the event of bank­ruptcy or de­fault on the part of the oth­er coun­ter­party; and

b.

the coun­ter­party mak­ing the ini­tial mar­gin pay­ment should be suf­fi­ciently hedged against the pos­sib­il­ity of bank­ruptcy or de­fault on the part of the re­ceiv­ing party or the cus­todi­al third party.