BX Berne Exchange, a Swiss bourse for small- and medium-sized companies, has abandoned plans to offer trading of structured products and challenge its bigger rival SIX Group.
“The main thing we were trying to do was to create a good alternative for trading derivative products, such as warrants,” said BX Chief Executive Luca Schenk in an interview. “At this moment market and competition conditions do not justify this offering.”
Banks pay more to list structured products in Switzerland than in Germany, where two exchanges compete, with lenders paying $392.6 for each Frankfurt listing while in Zurich its $1,057.9. Investors traded $34 billion of structured products in Switzerland in 2012, according to the Swiss Structured Products Association.
BX, which counts Credit Suisse Group AG (CSGN) and UBS AG (UBSN) among its members, started work on an initiative in the third quarter of last year to allow trading of structured products. SIX Group’s Scoach is the only exchange in Switzerland regulated by the Swiss Financial Market Supervisory Authority to offer trading of warrants and certificates.
Scoach was set up the in 2007 by SIX and Deutsche Boerse AG, which last week said they will dissolve their joint venture. The Swiss Exchange will run the Zurich part of the business called Scoach Swiss from June 30 and the Frankfurt unit will be run separately, executives from both companies said.
“We want more entrepreneurial freedom to shape the market,” Christian Katz, chief executive officer of the Swiss Stock Exchange said. This could include a review of prices, said Andre Buck, Scoach’s Zurich-based head of sales and marketing.
Structured product issuers in Switzerland are currently discussing the the costs involved in selling the securities, said Daniel Sandmeier, who is president of the Swiss Structured Products Association and the Zurich-based head of structured products marketing and distribution at Credit Suisse. The discussions will continue “with or without the Berne project,” he said.
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