Swiss Market Rules & Guideline You Need To Know

The primary stock market index in Switzerland is the blue-chip Swiss Market Index (SMI), which consists of twenty of the largest and most liquid stocks from the Swiss Performance Index (SPI). The SMI is a price index and does not account for dividends.

Introduction of the Swiss Market

On June 30, 1988, the SMI was first released, with a base score of 1,500 points. On July 2, 2019, it closed above the 10,000-point threshold for the first time.

On June 17, 2021, it achieved the 12,000-point milestone. After dropping more than 20%, it entered a bear market on September 22, 2022, and is now in one.

This put an end to the bull market, which on December 28, 2021, had achieved an all-time high closing price below $13,000

Once a year, its composition is evaluated. There are two mid-caps and eighteen large-caps as of September 2022. Real-time calculations are made.

The instant a new transaction takes place in a security that is part of the SMI, the index level is updated and shown.

The SMI comprises 85% to 90% of the trading turnover of Swiss and Liechtenstein stocks listed on the SIX Swiss Exchange and around 70% of the capitalization of the free-float Swiss equity market.

It serves as a benchmark for many mutual funds, index funds, and exchange-traded funds (ETFs) and is also the underlying index for derivative financial instruments, including options, futures, and structured products.

The SMI is registered with the European Securities and Markets Authority and, along with other SIX indices, was endorsed under the EU Benchmarks Regulation in 2020.

This endorsement allows it to be used as a basis for financial products marketed in the EU.

Rules & Regulation Swiss Market

Acceptance criteria Swiss Market

The SPI serves as the SMI’s underlying universe, from which candidate constituents are chosen. To be approved for inclusion in the SMI, an issue must fulfil strict criteria related to market capitalization and liquidity.

It must, on the one hand, account for a minimum of 50% of the average liquidity of the issues that make up the SPI.

However, it must have a minimum free-float capitalization that is at least 0.45% of the total SPI capitalization. The deciding elements in the quarterly rankings are therefore capitalization and trading volume.

Every year on the third Friday in September, the content of the index is examined.

Fixed number of 20 securities Swiss Market

The SMI comprises a fixed number of 20 securities as of the ordinary review date in September 2007. Prior to this date, the index contained 25 listings.

It is worth noting that the number of constituents of the index (20) is below the generally accepted minimum sample size of 30 required to reach statistical significance.

Capped weightings Swiss Market

In 2017, SIX Swiss Exchange modified the rules of the SMI to address the issue where the top three constituents (Nestlé, Roche, Novartis) represented over 60% of the index capitalization.

The change introduced capped weighting, ensuring that no constituent’s weight in the SMI index could exceed 18%.

Adjusting any weight that exceeds 18% down to that value is done every quarter.

However, if a constituent reaches a weight exceeding 20% during a quarter (intra-quarter breach), then the weight is brought back to 18% without waiting for the next quarterly review.

During the transition, changes were progressively implemented in steps of at most 3% per quarter to make the transition smoother.

Additionally, a new index, the SPI 20, was created to continue indexing the 20 SMI constituents without any caps.

SMI Constituents Swiss Market

Current constituents

As of June 13, 2023, the SMI index consists of the following 20 stocks. The ranking is based on free-float capitalization as of June 13, 2023.

The first ten weights are as of April 28, 2023, and the other weights are as of March 23, 2020. The most recent update following the regular review took place in June 2023, when Kuehne + Nagel replaced Credit Suisse Group.

SMI family

SMI refers to a family of indices that include the SMI itself and the SMI MID, which comprises the next 30 large-caps and mid-caps, and the SMI Expanded, encompassing all 50 shares.

These indices come in various variations. For instance, the SMI, a price index, also exists as a performance index known as the SMI Cum Dividend (SMIC), which factors in dividend distributions.

History of Switzerland Market Index

History of index constituents

Historical values

The following table shows the annual development of the Swiss Market Index since 1988

Standards

The table below displays the historical milestones of the Swiss Market Index. Please note that the latest values are not final: italicized values indicate that they may be revisited if the bear market continues, while values in parentheses suggest that they will be revisited if a bull market is reentered (i.e., the previous peak is reached again). Other values may be revisited in the event of a crash, assuming a threshold of -50%.

To maintain a logarithmic scale, the table uses increments similar to exchange ticks: 1 between 5 and 10, 2 between 10 and 20, 5 between 20 and 50, 10 between 50 and 100, and so on.

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