Operating Contribution of the Business Units
At CHF 565.6 million, the Securities & Exchanges business unit accounted for the largest share of operating income at SIX in 2020. Because of the high level of market volatility in the year under review, the Swiss Stock Exchange registered an increase in trading turnover of 18.6%. The number of transactions rose by 55.3% year on year. The suspension of EU equivalence since July 2019 continued to drive consolidation of trading in Swiss equities at SIX.
SIX successfully mastered the challenging circumstances of 2020.
The SMI ended the year up 0.8% compared to 2019, at 10,703.5 points. During the course of 2020, it exceeded the 11,000-point mark for the first time. The high point and thus the all-time record (end-of-day level) was reached on 20 February (11,270.0 points); the low point of the year was recorded on 16 March at the beginning of the lockdown in Switzerland, at 7,650.2 points. High levels of volatility also affected post-trade activities. Clearing transactions rose by 19.4%. Settlement business benefited, too, with settlement transactions up 29.8% and average deposit volume up 3.2% compared to the previous year.
In the primary market, the Swiss Stock Exchange recorded two IPOs, in the shape of Ina Invest Holding and V-ZUG Holding. A further CHF 88.1 billion in capital (+13.2% compared to the previous year) was raised through numerous bond issues. In addition, the estimated value of capital increases undertaken by companies already listed amounted to just under CHF 6 billion. Taken together, these figures demonstrate the solid financing ability of the Swiss Stock Exchange, even in times of market uncertainty.
BME contributed CHF 196.6 million to operating income at SIX from the closing of the transaction in June until the end of December. Of BME’s total annual revenue in 2020, 40% was attributable to its Equity business, 24% to Market Data and Value-Added Services, and a further 21% to Settlement and Registration.
In Spain as in Switzerland, trading on the stock exchange was characterized by a high level of volatility as a result of the pandemic. The IBEX-35 reached a high of 10,083.60 points on 19 February and a low of 6,107.20 points a month later (16 March). The number of stock market transactions rose by 50% year on year. Clearing and settlement transactions in this segment rose as well because of heightened activity in equity trading. Equity clearing transactions were up by 48.4% year-on-year, and the number of settlement orders rose by 5.8%.
In the primary market, companies raised EUR 15.7 billion through capital increases in the year under review, 17.5% more than in the previous year. Overall, financial flows to companies through IPOs, new admissions or capital increases grew by 10%. Although the share prices of many companies listed on the BME have suffered, the financing mechanisms designed to help businesses and the public sector to face the consequences of the COVID-19 crisis have worked effectively. Admission of Spanish public debt on the regulated fixed income market increased 36%. On the “BME Growth” SME equity market (the EU label for SME growth markets replaces the previous name “MAB”), BME listed nine new entrants. Growth markets fared significantly better in the year of the pandemic than the established markets: While the IBEX-35 fell by 15.4%, the IBEX Growth Market All Share and IBEX Growth Market 15 indices recorded gains of 39.7% and 54.1% respectively as at the end of December.
The indices of the IBEX family as well as trading data in real time and information on the financial instruments listed on BME are all part of the range of services offered by BME in its Market Data and Value-Added Services business. In the year under review, BME added further to the number of customers in this business. From 2021 it will be integrated into the Financial Information business unit at SIX.
The Financial Information business unit generated operating income of CHF 365.7 million in the year under review, 26.6% of the total operating income of SIX, and slightly below the previous year’s figure owing to negative currency effects (–0.7%). Excluding the currency impact, the business unit’s operating income was above the previous year’s results.
Reference data and corporate actions have continued to account for the largest share of revenue in the Financial Information business. However, because of the further increase in compliance stipulations placed on business and the financial sector, it is mainly regulatory data that is generating additional growth, which SIX also seeks to foster by offering new products and services in this area. In the year under review, SIX supported its customers with newly introduced data sets for adjustments that became necessary as a result of Brexit and the regulatory changes brought about by MiFID II. The highest growth rates were once again recorded by the Sanctioned Securities Monitoring Service.
SIX won new customers in its index business. There is growing adoption of SARON – calculated by SIX – as a reference interest rate to replace LIBOR. In Switzerland, several banks started using SARON as a reference interest rate for the calculation of mortgages.
With digital payment solutions SIX is supporting the transformation in payment transactions.
The operating income of the Banking Services business unit was slightly lower than in 2019 at CHF 185.9 million (–0.9%). Consumers’ payment behavior changed significantly in 2020: as a result of the pandemic, cash withdrawals and payments by debit card fell for a short time during the Swiss lockdown in April by around 50% and 30% respectively. While card payments rose again as the year progressed, cash use stayed low. As a consequence of falling cash withdrawals, ATM transactions were 23% below the previous year’s level at the end of the reporting period.
By contrast, electronic and digital payment solutions grew rapidly, with a boost from COVID-19. SIX recorded its strongest growth in digital bills, with eBill transactions up by 60%. The migration of bank customers from PostFinance to the eBill platform played a significant role in this development. At the beginning of the year SIX introduced new functions on the eBill platform, such as the automatic addition of new billers, which gave further impetus for growth.
Furthermore, digitally readable QR-bills were introduced across Switzerland on 30 June, with a view to progressively replacing the traditional payment slip.
A further milestone in 2020 was the successful installation of uniform multi-vendor software on almost 6,000 ATMs in Switzerland and Liechtenstein. SIX thereby successfully concluded a major project extending over several years. With the uniform software standard, SIX will bring additional transaction volumes onto its systems and has created the basis for adding further services in the future, such as the monitoring and control of ATMs. In view of the declining use of cash in particular, the operation of ATMs for banks will thereby be made simpler and more cost-effective. For 2021, SIX is planning to conduct a feasibility study looking to optimize the number of ATMs across different banks.