BX Swiss is one of two FINMA-supervised stock exchanges in Switzerland and is based in Zurich since 2017. This article is intended to give you some insight of where we think the Swiss marketplace in general is heading, and to offer you some suggestions as to how we could face the existing and coming challenges together.
by Lucas Bruggeman
Since the takeover by Boerse Stuttgart Group at the end of 2016, BX Swiss (the former Bern stock exchange) has been embedded in the international stock exchange group that is very much geared to the needs of private investors in the respective countries based on a state-of-the-art technical infrastructure. As a result, BX Swiss was able to massively expand its product range and has already attracted several new issuers to its various trading segments.
Our longer-term goal is to become “the investors’ favorite stock exchange in Switzerland.” The focus is on the needs of private investors and independent asset managers. Our biggest competitor is not another exchange but the OTC market. Trading via OTC platforms is usually cheaper but less regulated. Our task as a stock exchange is to make market participants aware of the advantages of listing and create an attractive environment for issuers. In the case of structured products, for example, we have noticed a shift from regulated environments to OTC platforms. This is not an ideal development for the marketplace in general and for investors in the long run. So, here at BX Swiss we want to change this and attract more trading activity onto our regulated market where we ensure liquidity, transparency, and market surveillance. With “deriBX”, we are providing a new and attractive trading segment for listed structured products.
We think that exchanges need to do more in educating the public and assist the companies in getting ready for stock exchange listings. Much needs to be done in this area. We achieve this partly through our own BX TV channel with which we regularly report on market events and also provide information on financial topics and products.
As a smaller exchange we need to be different. Being small also offers benefits – we are closer to our partners and customers. We are on the same level with larger exchanges when it comes to regulation. We try to come closer to the investor’s needs and are very agile in providing innovative pricing and market models to market participants.
We would also like to further expand our range of exchange-traded ETFs and, as an exchange, help to create more attractive framework conditions for IPOs of SMEs. There are many interesting SMEs and many investors here in Switzerland who want to invest in these companies. Unfortunately, a stock exchange listing is often out of the question because the total costs in Switzerland are too high. We think that as a stock exchange we can play an important role to improve this situation. The exchanges alone cannot do this. We need a working ecosystem with banks, law firms, paying agents, investor relation agencies, and research firms.
The Swiss market is well-known for its steady and reliable infrastructure but also for its innovation. Switzerland is home to top universities like ETH, HSG, and also international tech companies like Google with thousands of employees working here in Switzerland on key products and services. Moreover, Switzerland is the home to thousands of very innovative SMEs.
Only 272 companies are listed on one of the two existing stock exchanges in Switzerland. Raising capital is one of the central functions of a stock exchange. Therefore, this is a challenge for us at BX Swiss too. The relevant market participants together need to create more attractive conditions and efficient access, so that SME companies can also benefit from a stock exchange listing. There are many players involved in stock exchange listings and all of them need to contribute and cooperate to increase the efficiency.
The stock exchanges will continue to fulfil their core task of being a marketplace for raising capital. Digitalization will present enormous opportunities but also challenges for banks and stock exchanges, and relatively soon the creation and trading of shares might take place on a fundamentally new technical basis.
This brings me to the question of how the future exchange will look like. We are not convinced that the ever-increasing speed of execution is a healthy way to move forward and to compete on that basis only. We should understand the basic purpose of a stock exchange as a marketplace and put more focus on the needs of companies and end-investors. Like providing additional benefits and reduce barriers by launching more digital products and services. Ultimately the stock markets remain the natural destination for many companies and will continue to play its role in the functioning of the global economy. The challenge for us is how quickly we continue our adaptation to the changing landscape by competing, but more importantly, collaborating with one another.
Lucas Bruggeman
Lucas Bruggeman, since February 2020 the new CEO of BX Swiss AG. Previously, Lucas Bruggeman worked as partner & investor with the Swiss alternative data provider Sentifi AG (since 2013). Lucas Bruggeman began his career in 1995 at ABN Amro Bank in the bond trading department with stations in Amsterdam, Frankfurt, and London. From 2006 to 2011, he was responsible for the bank's private investor products division in Switzerland. From 2011 to 2013, Lucas Bruggeman was a member of the executive management of the Liechtensteinische Landesbank (Schweiz) AG in Zurich. He lives with his family on Lake Zurich since 2004.