Swiss Finance: Capital Markets, Banking, and the Swiss Value Chain

CHAPTER 8

Swiss Equity Markets

INTRODUCTION

During the past 20 years, powerful changes have occurred in Switzerland's equity markets. Global competition (especially from Asia) has increased dramatically, foreign businesses have delisted their shares from Swiss exchanges, and the nation's largest companies have increased their share of total stock market transactions. The growth of structured products has presented customers, exchanges, and financial regulators with new opportunities and a host of apprehensions regarding risks and how to keep them at moderate levels. Faced with the threat of diminished relative importance, the Swiss finance sector has not been a passive bystander. Rather, it has aggressively fought back by internationally integrating its exchanges and battling to reinvent itself through the creation of novel financial products.

EQUITY MARKETS

Equity (i.e., stock) markets are a subtype of the financial sector that bring buyers and sellers of company shares together. Often, equity markets are associated with trading, (i.e., the exchange of equity ownership rights), but their primary economic function is to raise capital for worthwhile economic ventures. Nevertheless, because of trading activity, equity markets are also an important source of price information for nonlisted firms.

Business enterprises looking for financing can raise capital by issuing various types of financial instruments. Among these, equity securities comprise those instruments that are normally ...