Ordinance of the Swiss Financial Market Supervisory Authority on Collective Investment Schemes

¹OTC trans­ac­tions may only be con­cluded on the basis of a stand­ard­ised frame­work agree­ment which com­plies with the per­tin­ent in­ter­na­tion­al stand­ards.

²The coun­ter­party must:

a.

be a reg­u­lated fin­an­cial in­ter­me­di­ary spe­cial­ised in such types of trans­ac­tions;

b.

en­sure prop­er ex­e­cu­tion of the con­tract; and

c.

meet the cred­it rat­ing re­quire­ments stip­u­lated in Art­icle 31 para­graph 1.

³It must be pos­sible to re­li­ably and veri­fi­ably value an OTC de­riv­at­ive on a daily basis and to sell or close out the de­riv­at­ive at mar­ket value at any time.

⁴If the mar­ket price for an OTC de­riv­at­ive is not avail­able, it must be pos­sible at all times to de­term­ine the price at any time us­ing ap­pro­pri­ate valu­ation mod­els that are re­cog­nised in prac­tice, based on the mar­ket value of the un­der­ly­ings from which the de­riv­at­ive was de­rived;

⁵Be­fore con­clud­ing a con­tract for a de­riv­at­ive un­der para­graph 4, spe­cif­ic of­fers must be ob­tained from at least two po­ten­tial coun­ter­parties. The con­tract is to be con­cluded with the coun­ter­party provid­ing the most fa­vour­able of­fer in terms of price. A de­vi­ation from this prin­ciple is pos­sible for reas­ons re­lat­ing to risk di­ver­si­fic­a­tion, or where oth­er parts of the con­tract such as cred­it rat­ing or the range of ser­vices offered by the coun­ter­parties in an­oth­er of­fer seem are more ad­vant­age­ous over­all for the in­vestors.

⁶If it is in the in­vestors’ best in­terests, ob­tain­ing of­fers from at least two po­ten­tial coun­ter­parties may be dis­pensed with. The reas­ons for do­ing so must be clearly doc­u­mented.

⁷The con­clu­sion of the trans­ac­tion and pri­cing must be clearly doc­u­mented.