Revision Of The Stock Exchange Act: New Rules On Insider Trading

Author:Dr. Martin Weber and Roman Laubscher
Profession:Schellenberg Wittmer

The amendments to the Stock Exchange Act that entered into force on 1 May 2013 result primarily in a comprehensive revision of the regulation against market abuse. The outcome is a major tightening of the prohibitions against insider trading and market or price manipulation.


1.1 Initial Position

The previously valid regulations in Switzerland for the abatement of abusive practices in the financial markets have increasingly proven to be incomplete and no longer current. The recent revision of the Federal Act on Stock Exchanges and Securities Trading ("Stock Exchange Act" or "SESTA") shall restore the Swiss capital market criminal law to international standards. Further, such revision shall strengthen the integrity and competitiveness of the Swiss financial centre.

1.2 Overview of the Revision of the Stock Exchange Act

On 1 May 2013, revised provisions for the abatement of abusive market behaviour came into effect. The revisions extend essentially to the following two levels:

the criminal offenses of the use of insider information and market manipulation have been clarified, extended and transferred from the Swiss Penal Code to the Stock Exchange Act. In particular, the category of potential offenders capable of committing insider trading has expanded considerably; at the regulatory level of financial market surveyance, the Swiss Financial Market Supervisory Authority FINMA has received wide-ranging powers for regulatory sanctioning of improper market conduct by both regulated and non-regulated persons. Further, the new law brings various adjustments in the area of public takeover bids (cf. our new website, www. and the disclosure of shareholdings. Therefore, the disclosure law - in particular the supervisory instruments of the FINMA - becomes significantly expanded. The most significant change in takeover law is the prohibition to pay so-called control premiums in advance of public takeover bids.

At the end of March 2013, FINMA opened a consultation procedure lasting until 13 May 2013 regarding the total revision of the Circular "Market Conduct Rules". This Circular shall replace Circular 08/38 and is expected to enter into force on 1 August 2013. Besides the adaptation of the new Circular to the new rules of SESTA and the Swiss Stock Exchange Ordinance ("SESTO"), certain provisions of the Circular have been adapted in light of the experience gained in recent years and according to international standards. This means, for example, that the organizational obligations set forth in the Circular shall no longer apply exclusively to securities dealers but to all entities subject to prudential supervision, in accordance with their respective specific business activity, size and structure.

The following information is limited to the significant changes regarding the abatement of the abuse of insider information. We do not further elaborate on the parallel changes made to the regulations against market and price manipulation, nor on the new provisions in the areas of takeover law and disclosure of shareholdings (for the latter...

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