SIX Expands European Microwave Network
After the Swiss Stock Exchange and the operator of Nasdaq’s Nordic exchanges signed a partnership agreement earlier in 2020, the jointly owned company successfully launched its first service between London and Stockholm beginning of September. In a short interview, Roger Hunziker, Co-Head 12H AG in the Business Unit Securities & Exchanges of SIX, comments on this great achievement.
Roger, can you explain the significance of the new microwave route that has gone live?
The completion of this new route is a great achievement and we are very proud that this was possible despite Covid-19 turmoil, especially as the link spans across five European countries. By further expanding the European microwave network of SIX with the new connection between London and Stockholm, the Swiss Stock Exchange and Nasdaq aim to making markets more efficient and bringing faster and more secure transactions to customers as well as fostering equal access to the most modern market data transmission technology for the benefit of all market participants.
What is the cooperation with Nasdaq about, and who else is involved?
As announced in April, the partnership between SIX and Nasdaq is operated through the jointly owned Swedish company RF Nordic Express AB (“RFNE”). SIX is invested in RFNE through its Zurich-based subsidiary 12H AG (“12H”), of which it acquired a majority stake earlier this year. Since its establishment, RFNE leveraged the microwave know-how of 12H and built the new low latency connection between London and Stockholm. 12H’s experience in building and operating such networks is a key puzzle piece in the democratized low latency access to the Swiss Stock Exchange. Before introducing the new route, our microwave network was already the largest in Europe, offering our trading participants fair and equal access to low-latency market data transmission from Zurich to London, Frankfurt and Milan as well as from Milan to Frankfurt and London.
What is the strategic rationale to invest in the expansion of the microwave network?
At the Swiss Stock Exchange, we have a long history of not only ensuring the stability and availability of our trading infrastructure, but also of making the most modern technology accessible to all our participants by partnering with leading technology providers. To actively shape the future of trading, we aim to offer the most advanced technology within our unique market structure. This creates the best possible trading conditions in Swiss securities and strengthens our position as their reference market. In addition, it is a testament to the innovative nature of the Swiss Stock Exchange. Microwave technology enables the fastest transmission of market data between trading centers. This allows Swiss Stock Exchange trading participants to identify price movements and implement investment decisions as quickly as possible. As a result, risks can be managed more efficiently which benefits participants and end investors alike. It also improves liquidity and tightens spreads, which results in better execution for everybody trading Swiss securities on the Swiss Stock Exchange.
And how does this work, from a technical and operational perspective?
Our microwave infrastructure across Europe allows clients to send data through the air instead of using fiber optic cable. As a result, signals are travelling at the speed of light and relayed in the most direct way possible. This speed advantage is coupled with a high level of availability and reliability. For this purpose point-to-point connections between the matching engines of exchanges are designed, built and operated. Along the ideal path the data signals are reinforced through dishes on towers. However, every gain comes with a downside which in this case is capacity, meaning the limited amount of bandwidth available per route.
What are the next steps for the microwave network this year and beyond?
As mentioned before, we intend to further grow the network and further democratize the low latency access to exchanges in a fair and equal manner. For this purpose, we are looking to expand our European footprint and offer the services to other exchanges and market participants. This also includes a plan how BME, the Spanish market infrastructure group acquired by SIX, will be connected to our microwave network. We’ll also continue improving routes and selecting the best available technology to achieve market leading low latencies and highest availability. In 2020, this includes significant upgrades to our route London-Zurich to be ready in case Brexit will result in Swiss equities also being traded on London-based MTFs again.
Financial Dialogue between Switzerland and the United Kingdom
The State Secretariat for International Finance (SIF) and Her Majesty’s Treasury (HMT) held their 4th Financial Dialogue in Bern on the 8th September 2020.
The financial services love-in between London and Bern stays on track amid the cross Channel bun fight. https://t.co/5PboSQbPHr
— Huw Jones (@reutersHuwJ) September 8, 2020
Senior officials from SIF and HMT engaged on how to deepen cooperation in financial services through an ambitious and comprehensive mutual recognition agreement, and suitable next steps in the coming months. In addition, the parties exchanged views on a broad range of topics of shared interest.
The Financial Dialogue was chaired by Deputy State Secretary Stefan Flückiger, SIF, and Katharine Braddick, Director General (Financial Services) of HM Treasury, and attended by officials from the Swiss Financial Market Supervisory Authority (FINMA), the Swiss National Bank (SNB), the Bank of England (BoE) and the Financial Conduct Authority (FCA).
SIF and HMT officials also met with representatives of the Swiss and UK financial services industry and exchanged views on the future shape of the bilateral Switzerland-UK relationship in the area of financial services.
A considerable part of the Financial Dialogue’s agenda was dedicated to discussing the implementation of the Joint Statement on deepening cooperation between Switzerland and the United Kingdom (UK), which was signed by the Swiss and UK finance ministers, Federal Councillor Ueli Maurer and Chancellor of the Exchequer Rishi Sunak, on 30th June 2020.
As part of these discussions, both sides reviewed the progress that has been achieved since the 30th June. They agreed that joint technical work has progressed well and should continue. Both sides agreed to schedule a meeting before the end of 2020 to take stock of the joint discussions and decide on next steps, including a further programme of discussion for 2021.
In addition, the Financial Dialogue enabled a valuable exchange of views and highlighted several opportunities for intensified cooperation going forward:
a) COVID-19: HMT and SIF officials exchanged views on the impact of the COVID-19 pandemic on their respective economies and financial markets, as well as on national and international policy discussions.
b) Sustainable Finance: Both sides exchanged information on their respective approaches in this field including steps they are taking to develop new capabilities through relevant education and training, such as the UK’s Green Finance Education Charter and the Swiss report on Sustainability in financial education and training in Switzerland. They agreed to increase collaboration on the potential domestic implementation of the recommendations issued by the Task Force on Climate-related Financial Disclosures (TCFD). It was agreed that both sides will schedule additional exchanges on these topics going forward. The parties also discussed respective ways they are seeking to ensure financial stability risks from climate issues are identified and addressed – such as climate related stress testing.
c) Stock market equivalence: In line with the discussions at ministerial level on 30th June, the UK reconfirmed that as soon as it is feasible once their equivalence powers come into force, they will lay the necessary legislation to allow UK firms to meet the UK’s share trading obligation on Swiss exchanges. Swiss officials confirmed that once Swiss shares can be traded freely on Swiss exchanges by UK market participants, UK exchanges will again be able to trade Swiss shares.
d) Multilateral topics: Both sides exchanged views on their respective priorities for several multilateral fora, such as the FSB and IOSCO. This included discussing the importance of effective international coordination in response to COVID-19 as well as in addressing longstanding trends impacting the financial system such as climate and technology.
e) Developments in digital finance/fintech: SIF and HMT officials shared their views on current plans and experiences in Open Finance, cross-border data flows in financial markets distributed ledger technologies and the role of Fintech firms in response to COVID-19.
f) Women in finance: Both sides discussed their shared ambition to see more women in senior roles in the financial services sector, and outlined steps they are taking domestically to increase gender balance in senior management.
The next Financial Dialogue is expected to take place in London in 2021.
Source: HM Treasury
European firms could operate temporarily in the UK after Brexit while seeking full authorisation.
The total value of UK financial services exports remained stable in 2020.
Temporary equivalence was set to expire on June 30, 2022.
The Bank has new powers for reviewing CCPs following Brexit.
Restricting access to London CCPs would result in collateral damage for EU banks and end users.