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THE NEWLY FOUNDED SWISS BOND COMMISSION (SBC)

Wolfgang MartyPresident of the Swiss Bond Commission25.06.04Amsterdam

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• INTRODUCTION

• SWISS BOND MARKET

• RECENT ACTIVITIES/DEVELOPMENTS

• FIXED INCOME INDICES

• SWISS BOND COMMISSION

• FINAL REMARKS

AGENDABOND MARKET AND BOND COMMISSION

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INTRODUCTIONSWITZERLAND

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INTRODUCTIONSWITZERLAND

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SWISS BOND MARKETCHARACTERISTICS• Separated in a domestic and foreign market

• Actively used by foreign issuers

• Active primary market and market making

• Less active secondary trading in many segments

• Most active segment are the “Eidgenossen” (market capitalization of around 90 bln CHF)

• Swiss Francs as currency is interesting for investor (safe haven)

• Low interest (inflation) environment

• Main investors are pension plans, insurance companies,but also foreign investors

• Part of Citigroup World Government Bond Indices (0.7%, Duration 7.5 Years) (21 Countries)

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SWISS BOND MARKETCHARACTERISTICS

• J.P. Morgan is planning to calculate a Swiss Government

Bond Index• Table - market statistics as of June 15, 2004

SegmentationDom/For

SwissfrancNominalin Mln

Straight Domestic 241'517.0 Foreign 178'952.0

Convertible Domestic 4'350.0 Foreign 8'320.0

Floater Domestic - Foreign 13'835.0

Dual Currency Domestic - Foreign 1'750.0

Total Swissfranc 448'724.0 (Source: SWX Market Statistics, one calculations)

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RECENT ACTIVITIES/DEVELOPMENTSEVENTS IN 2003

• Brain Storming Meeting within SBC

• Erroneous calculation of SWX Fixed Income Indices

• Termination of Pictet Indices

• Series of informative Presentation in SBC

• IBOXX

• SWX

• Euro MTS

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RECENT ACTIVITIES/DEVELOPMENTSIN THE MEDIA/PUBLIC

• Interview with FuW (Swiss newspaper on financialmarkets) at first Bond Congress

• Presentation in the Method and Measurement committee on Fixed Income performance attribution (London)

• Update on the Commission in FuW

• Presentation in Index Commission of the SWX

• Numerous requests on information about the commission

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The Swiss Bond Index (SBI)

(SWX)

• Introduction of new indices

• Get hold of ratings

• Change of inclusion criteria

• Extension of committee

FIXED INCOME INDICESINDEX COMMITTEES

Liquid Swiss Index (LSI)(CS Group)

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Company Size

Fett = be s teh e nd e In d ize s (se it 31 .12 .1 99 1)N o rm a l = N e u e In d ize s (se it 1 .1 0 .19 9 8)

1 - 3

3 - 7

7 +

G overnm ent N o n -G o ve rn m e nt

"B ran che n ":

1 0+

7 -10

5 - 7

3 - 5

1 - 3

"R e s tlau fze it":

S w iss B o n d In d ex D o m e s tic

Supranational

Corporate

G overnm ent

"B ran che n ":

1 0 +

7 - 10

5 - 7

3 - 5

1 - 3

"R e s tlau fze it":

Sw iss Bond Index Foreign

S w iss B o n d In d e x (S B I)

FIXED INCOME INDICESSBI INDEX

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ZKB Bondindex Domestic1-3 years 3-5 years 5-7 years 7-10 years > 10 years

Government x x x x xAAA x x x xAA x x x xA x x x

ZKB Bondindex Foreign1-3 years 3-5 years 5-7 years 7-10 years

AAA x x x xAA x x x x

• Synthetic index (const. duration); similar to REX/PEX

• rating instead of usual sector subindices

• computed by SWX

• inception date 1998

• monthly revision of index universe

FIXED INCOME INDICESZKB INDEX

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BOARD

AGM

WORKING GROUPS/COMMITTES

LINK EBCSECRETARIAT/TREASURY

SWISS BOND COMMISSIONSTRUCTURE

Daniela SteinbrinkDaniel Egger

Wolfgang MartyJürg Tobler

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SWISS BOND COMMISSION REPRESENTATION

• Financial InstitutionsFixed Income Portfolio Management,Research, Trading, Sales, Origination

• Pension Funds (Public/Private)

• Swiss Stock Exchange

• Data Provider

• Regulator

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SWISS BOND COMMISSION BOARD

• Wolfgang Marty, Credit Suisse

• Daniel Eggler, Postfinance

• Michael Tschudin, RüdBlass

• Daniel Hunziker, Swissca

• Daniela Steinbrink, UBS

• Jürg Tobler, Zürcher Kantonalbank

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• Attendance: 26 people

• Explicit apologies: 14 people

• Representation: about 20 institutions

• Host: Swissca Fund Management

• Finalization of statues

• Logo

SWISS BOND COMMISSION THE FOUNDING AGM

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SWISS BOND COMMISSION PROJECT STAMP DUTY

• The Stamp duty was introduced in 1918; the current federal law dates from June 27, 1973 and was last revised on January 1, 2001

• Urgent, temporary amendments introduced by the Bundesrat on July 1, 2001 will expire in 2005

• The latest revision failed a public referendum on May 16, 2004

• A working group called “pretime” (Prévoir Droits de Timbre) founded on August 20, 2001 and including members of parliament, administration, external experts and the SWX is working on further improvements

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SWISS BOND COMMISSIONPROJECT FAIR VALUE

• Asses existing research• Something similar to method and measurement subcommittee• Competence centre for modelling CHF yield curve (standardization)• Platform for discussing general methodical and technical issues

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FINAL REMARKSWORK IN PROGRESS / GOALS

• Creation/Revival of one Home Page• Constitution of working group (report on first results of working group)

• Invitation of further guest speakers (see i.e. paper from Prof. Kugler)

• Establishing a network between market participants

• Establishing the SBC as prime contact for questions regarding the Swiss Bond Market