Swiss DOTS: efficient, affordable and regulated
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Against all odds, Swiss DOTS and their five participating issuers have found a place in the Swiss leveraged products market and firmly established themselves there. More than 90'000 derivatives products can be efficiently traded at affordable prices via the platform.
Barely eight years after its launch, this platform for over-the-counter trading of leveraged securities has firmly established itself in the Swiss market for structured products. In 2020, the monthly average number of transactions was 45'000. It currently boasts a market share of around 50%, measured in terms of all transactions with leveraged securities in Switzerland. Swissquote clients currently have over 90'000 leveraged products to choose from. The advantages of Swiss DOTS are the long trading hours, low fees, pricing to three decimal places and numerous order types.
Narrow spread between bid and ask prices
Narrow bid-ask spreads give Swiss DOTS a competitive edge over other exchanges. The spread is a particularly important cost criterion for active traders. Thanks to the Swiss DOTS trading model and the ability to calculate product prices to three decimal places, extremely efficient and attractive pricing is possible. The design of the OTC platform as a quote-request system ensures attractive terms. However, this means that pricing is not binding. The issuer may withdraw the offer during the specified time window. The banks make use of this right, for example, whenever an underlying asset is subject to strong price fluctuations. This means that Swiss DOTS can put a stop to arbitrageurs, who try to profit from any deviation of the structured product from the fair price within fractions of a second.
It should be noted that different spreads may occur for the underlying instruments during Swiss DOTS trading hours. This is because equities are primarily traded during official stock exchange hours. For example, issuers of US equities normally set larger spreads until trading opens in the United States. With indices, currencies and many commodities traded around the clock via futures, however, the spread differences during the day are usually minimal.
Range of products
Leveraged products are the dominant category in the Swiss structured products market. They are suitable both for traders on the lookout for short-term gains and for investors who use these derivatives to hedge a portfolio. Since its launch in May 2012, the range offered by Swiss DOTS has grown continuously. The five issuers currently active on this trading platform offered 89,757 products on 29 April 2021. In terms of product types, warrants clearly dominate, followed by volatility-neutral knock-out warrants and mini-futures. The range of fourth-placed constant leverage products is relatively small.
Attractive trading hours
The trading hours are very much to the traders’ liking. On every trading day, they can seize opportunities on Swiss DOTS from 08:00 to 22:00, while the derivatives exchanges for leveraged products are only open from 09:15 to 17:15. Traders can therefore start trading Swiss DOTS even before the official start of exchange trading. In the evening it is generally possible to buy or sell leveraged products until the US stock market closes. The long trading hours mean that traders can better react to fluctuations in their positions, which is immensely beneficial in volatile market phases. Costs are also much lower compared to traditional exchanges. Swissquote only charges a broker commission of CHF 9 per trade, which helps boost trading performance.
Get more information on the Swissquote website.
Regulated?
As a trading platform, Swiss DOTS is not subject to the Swiss Financial Markets Infrastructure Act (FMIA) like the BX Swiss and SIX stock exchanges.
Swissquote’s trading platform is an OTC market domiciled in Switzerland consisting of five regulated issuers who act as market makers on Swiss DOTS.
Structured products, which also include leveraged products, are regulated by the Swiss Financial Market Supervisory Authority (FINMA) rather than FMIA. With this in mind, we can confirm that there is only a small difference from a legal perspective between whether the issuers trade their product on Swiss DOTS or one of the two Swiss stock exchanges. Their products cannot be listed on Swiss DOTS. This means that trading usually takes place between the investor and the issuer of the product in question. The technical term for this is an over-the-counter (OTC) transaction. It is important to note that the issuer does not take a counterposition to the investor.
Every position is almost 100% hedged by the issuer on the market.
The Swiss DOTS platform offers you access to a wide selection of leverage products with various underlying products, such as international and Swiss equities, currency pairs, indexes or even precious metals.
At the same time you can benefit from particularly long trading times — from 8:00 to 22:00 — and various order options.
Swiss DOTS products can be traded at a flat rate from just CHF 9.- .
DISCLAIMER
The content of this article (including market commentary, market data and observations) is not a work product of any research department of Swissquote or its affiliates. This material is intended to highlight market action and does not constitute investment, legal or tax advice.
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Swissquote is the marketing brand for the activities of Swissquote Bank Ltd (Switzerland) regulated by FINMA, Swissquote Bank Europe SA (Luxembourg) regulated by the CSSF, Swissquote Bank Ltd (UK) regulated by the FCA, Swissquote Financial Services (Malta) Ltd regulated by the Malta Financial Services Authority, Swissquote MEA Ltd. (UAE) regulated by the Dubai Financial Services Authority, Swissquote Pte Ltd (Singapore) regulated by the Monetary Authority of Singapore, Swissquote Asia Limited (Hong Kong) licensed by the Hong Kong Securities and Futures Commission (SFC).
Products and services of Swissquote are only intended for those permitted to receive them under local law.
All investments carry a degree of risk.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74–89 % of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Digital Assets are unregulated in most countries and consumer protection rules may not apply. As highly volatile speculative investments, Digital Assets are not suitable for investors without a high risk tolerance. Make sure you understand each Digital Asset before you trade.
