New Possibility Of Separate SIX Trading Line For Share Buybacks By Swiss Companies Listed Abroad

On 2 February 2026, the Regulatory Board of SIX Swiss Exchange ("SIX") announced that, with effect from 2 March 2026, SIX will enable Swiss-domiciled companies listed on recognized foreign stock exchanges to establish a separate trading line for the purpose of buying back their own shares without being listed on SIX (commonly referred to as a "second trading line" or "zweite Handelslinie" for SIX listed issuers). For this purpose, SIX will introduce a new trading segment "separate trading lines for equity securities listed abroad". Initially, this facility is only available to Swiss issuers listed on stock exchanges in the United States and the United Kingdom.

This regulatory development represents a significant step forward for Swiss issuers listed on a recognized foreign stock exchange seeking a tax-efficient and compliant mechanism to execute share buybacks without the requirement to be formally listed on SIX.

BACKGROUND: WITHHOLDING TAX DEDUCTION

Under Swiss law, share buybacks are generally subject to a limitation to 10% of the issued share capital and require freely disposable equity capital. Swiss withholding tax ("WHT") at 35% applies to buybacks by Swiss companies for cancellation, calculated on the difference between the buyback price and the share's nominal value, except to the extent qualifying capital contribution reserves are diminished by the buyback. If shares are not bought for cancellation and not re-sold within six years or exceed the 10% share capital threshold, WHT is triggered, and failure to deduct WHT at purchase can result in a "gross-up" to approx. 54%.

Swiss-listed companies typically use a "second trading line" on SIX to facilitate WHT deduction and enable selling shareholders to reclaim such WHT, based on Swiss domestic law or a tax treaty. A second trading line is a separate order book on SIX that is set up specifically for companies' share buyback programs. Only the issuer itself can acquire its own shares under a separate securities identification number (ISIN), while trading continues in parallel on the normal line. For shares sold on the second trading line, the WHT of 35% is deducted from the repurchase price ("net price"). This special procedure solves the problem of anonymity and the WHT deduction compared to a repurchase on the first trading line. For Swiss issuers listed abroad, no comparable procedure has existed so far; some have used a "virtual second trading line" with the involvement of an intermediary bank specially appointed for this purpose, but this requires Swiss Federal Tax Authority rulings that have become increasingly difficult to obtain.

SCOPE OF NEW SIX REGULATORY FRAMEWORK

With the entry into force of the amended SIX regulations on 2 March 2026, issuers listed on a foreign stock exchange recognized by the SIX Regulatory Board and considered Swiss pursuant to the Swiss Federal Act on Withholding Tax (i.e., in particular Swiss-domiciled issuers) may open a separate trading line on SIX for the purpose of buying back their own equity securities. Initially, only equity issuers with a listing on a recognized foreign stock exchange in the United States or the United Kingdom will be admitted to this facility. The separate trading line does not constitute a formal listing but permits time-limited buybacks by the issuer under a separate securities identification number (ISIN).

APPLICATION REQUIREMENTS

Applications to open a separate trading line must be submitted at least ten trading days before the planned first trading day. Exceptionally, this period may be reduced to a minimum of five trading days upon a substantiated request. The application must describe the planned transaction and timetable, request admission to trading of the relevant participation rights on the separate trading line, and specify the desired first trading day, the duration of trading (including the last trading day), and the necessary trading and settlement provisions. As an additional technical requirement for admission, clearing and settlement of transactions must be possible through a SIX recognized settlement system.

Issuers must provide declarations confirming, inter alia, compliance with the statutory law requirements for permissibility of share buybacks (see art. 123 para. 1 of the Swiss Financial Market Infrastructure Ordinance ("FinMIO") or the corresponding provisions on share buybacks applicable at the exchange where the securities are listed); meeting the conditions for the application of the safe harbor rule in art. 123 para. 4 FinMIO (see following section "Ongoing Requirements"); and that the bank mandated to execute the buyback will not claim a refund of WHT deducted from the purchase price of the relevant shares. Further customary declarations must be submitted, and a SIX "Official Notice" must also be published at the latest on the first trading day, containing, inter alia, a reference to the existing listing on a recognized stock exchange.

Given that the separate trading line does not constitute a listing on SIX, no listing prospectus for the admittance to trading of the issuer's shares is required.

TRADING PARAMETERS

Trading hours on separate trading lines generally follow those of the Swiss main stock market, i.e. they run from 09:00 to 17:30 CET. Post-trading occurs until 22:00 CET. Depending on where an issuer is listed, and in particular for US-listed issuers, this can result in a significant gap in trading hours.

The market model is a Central Limit Order Book supporting normal and retail orders. Transactions must be settled within three trading days after completion (T+3). This should allow sufficient time to arrange for cross-border settlement if the issuer's primary central securities depository (CSD) is outside Switzerland (such as The Depository Trust Company (DTC)).

ONGOING REQUIREMENTS

With the opening of a separate trading line not constituting a listing in Switzerland, Swiss issuers listed on a foreign stock exchange will continue to be exempted from rules applicable solely to Swiss-listed issuers, including Swiss takeover law, Swiss rules on the disclosure of significant shareholders, and ongoing SIX listing obligations. While Swiss-listed issuers must in certain cases pay at least 50% of their dividends out of profits subject to WHT and must use at least 50% of their capital contribution reserves, if available, for buybacks for cancellation, diminishing their potential for WHT-free reserves, foreign listed issuers with a separate trading line on SIX will continue to be exempt from these limitations on the use of WHT-free reserve rules in relation to dividends and share buybacks.

Swiss financial market conduct rules on the prohibition of insider trading and market manipulation (see art. 142 et seq. of the Swiss Financial Market Infrastructure Act) will become applicable to the issuer's securities once a separate trading line has opened. However, art. 123 para. 4 FinMIO, which must be complied with when trading on a separate line on SIX (see section "Application Requirements"), provides a safe harbor for share buybacks that comply with specified conditions (volume limits, price restrictions, disclosure), protecting issuers from market abuse allegations. If an issuer adheres to these conditions, the buyback is presumed not to violate the rules on market abuse.

FEES

For its new trading segment "separate trading lines for equity securities listed abroad", to establish and maintain a separate trading line for a maximum of 36 months, SIX will apply a basic charge of CHF 30,000 and a variable charge of CHF 20 per CHF 1 million of the announced transaction or buyback amount (capped at CHF 50,000), plus certain transaction fees.

ASSESSMENT AND OUTLOOK

The new ability to have a separate trading line without a SIX listing marks a significant improvement in Swiss capital markets regulation. It extends the benefits of the separate trading line mechanism – previously available only to issuers with a primary or secondary listing on SIX – to Swiss-domiciled companies listed exclusively abroad.

Having a separate trading line has the potential to offer attractive benefits for Swiss-domiciled companies considering a buyback program that typically do not have this option available at their primary listing venue. It could serve as a more straightforward and potentially more cost-effective alternative to the "virtual second trading line" approach, which has become increasingly difficult to implement. By enabling foreign-listed issuers to use an established SIX trading mechanism without the need to obtain a Swiss listing, such issuers may conduct their repurchases in a tax-efficient manner without significant additional regulatory burden.

The extended settlement cycle of T+3 adequately takes the potential need for cross-border settlement into account. On the other hand, it remains to be seen if the fact that trading hours for the separate trading line on SIX diverge from those of the issuer's listing venue will negatively impact trading volumes, especially for US-listed issuers.

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