Important risk and regulatory disclosure about TDX
TDX is an Organised Trading Facility (“OTF”), in accordance with Art. 42 of the Swiss Financial Market Infrastructure Act (“FMIA”), for the multilateral trading of digital assets, securities and other financial instruments, whose purpose is the exchange of bids and the conclusion of contracts based on discretionary rules.
Taurus SA (“Taurus”) is the operator of the TDX OTF according to Art. 43 FMIA. This means that Taurus regulates the conduct of participants and issuers, monitors trading and market activity, and maintains rules and guidance to provide a fair and transparent venue for raising capital and trading digital assets, securities and other financial instruments.
Taurus draws the attention of TDX (direct and indirect) participants about the following important risks and information regarding TDX and digital assets, securities and other financial instruments admitted to trading on TDX:
- TDX is not a stock exchange according to Art. 26 lit. b FMIA, but an organised trading facility according to Art. 42 FMIA.
- Most of the digital assets, securities and other financial instruments admitted to trading on the TDX OTF are not listed (unlisted) and are exclusively traded “off-exchange/over-the-counter” (so called “OTC/private securities”). As a result, Swiss regulations that apply to (1) issuers that have securities listed on a stock exchange in Switzerland, and (2) to its investors, do not apply. In particular, the provisions of FMIA regarding the mandatory disclosure of large interests in listed companies (Article 120 et seq. FMIA) or public takeovers (Article 125 et seq. FMIA) do not apply. This means, among other things, (i) that the beneficial owners of large interests in the Company are not under any duty to make the nature of their interest in the Company public, (ii) that the provisions of the FMIA designed to guarantee equal treatment and undistorted choice of shareholders in the event of a public takeover offer do not apply if a public takeover offer is made for the shares of the Company and (iii) that the provisions of the FMIA that require any person who acquires more than one third of the voting rights of a company to make a cash offer at a minimum price for all the listed shares of the company does not apply. Finally, the Stock Exchange Rules (e.g., minimum free float, reporting of management transactions, lock-up of management transactions, ad-hoc publicity rules), typically applicable to listed securities, do not apply neither in such a case. The same rules as for a normal private company do apply instead (like for any other private equity investments).
- An investment in an OTC/private security (e.g., private equity, private debt) is speculative and involves a high degree of risk, that can lead in certain cases to a substantial or total loss of capital, especially in case of bankruptcy and/or default. OTC/private security investments are not usually subject to regulation, in particular with regard to investor protection. Because of this and their lack of transparency (e.g. limited disclosure of financial accounts or no publication), they entail higher risks for investors. Reliable information regarding issuers of OTC/private securities, their prospects, or the risks associated with the business of any particular issuer or an investment in the issuer’s securities may not be available. As a result, it may be difficult to properly value an investment in an OTC/private security. Please read carefully the risks associated with private equity investments in the paper called “Risks Involved in Trading Financial Instruments” published by SwissBanking.
- Issuers of OTC/private securities admitted to trading on TDX have no duty to provide any information to investors more than what is required by law to normal private company. Quotation of a security on TDX does not in itself create any ongoing filing or reporting obligations. In some cases, issuers may not even be aware that their securities are quoted on TDX. There can be no assurance that the information provided on the TDX platform is accurate or error free. Any user of such information expressly assumes all risks from using the information. In particular, Taurus does not review, and is not responsible for confirming, the accuracy of issuer documents and information submitted to TDX for inclusion on this site. The issuer and its management are primarily responsible for the accuracy of any information regarding the issuer. Investors are urged to confirm directly with the issuer the accuracy of any information obtained from this site prior to making any investment decision. The information on this site is not intended to be used as the basis for any investment decision.
- Many market segments available for trading on TDX are relatively illiquid, or “thinly traded”, and may be even in some cases totally illiquid. The market for a financial instrument that is not admitted to trading on any trading venue is not regarded as being liquid within the meaning of Article 42 FMIO. Moreover, the market for a financial instrument is only regarded as being liquid within the meaning of Article 42 FMIO if the instrument was traded at least 100 times per trading day on average in the previous year (from January to December) on the trading venue to which it was first admitted.
- Illiquid securities are often difficult for investors to buy or sell without dramatically affecting the quoted price. In some cases, the liquidation of a position in an OTC/private security may not be possible within a reasonable period of time. Last TDX prices of illiquid or thinly-traded digital assets, securities and financial instruments may differ substantially, and by several orders of magnitude, from their fair values. Hence, last TDX prices are not an indication, nor a guarantee, of future TDX prices and fair values. Moreover, in the case of digital assets, securities and/or other financial instruments exclusively traded off-exchange/OTC, last TDX prices and volumes may differ materially from the prices and volumes of other transactions executed OTC or bilaterally. Those third-party trades and prices are not transparent and not reported on the TDX OTF. Finally, last prices may also differ materially from the fair value in the case of low free-float, closely-held shares, knowing that there are no minimum free float requirements applicable for OTC/private securities.
- Taurus may decide unilaterally, at any time and at its own discretion, to withdraw a digital asset, security and/or financial instrument from being admitted to trading on the TDX OTF. In such a case, liquidity may be substantially reduced, or even in some case totally disappear, and current shareholders/investors may face difficulties, or in some case a total impossibility, to sell their holdings.
- According to the TDX OTF Rulebook, Taurus may use various types of market schedules ranging from continuous limit order books to discretionary auctions. Taurus may change market schedules at any time at its own and full discretion. It may also decide on, set and change at any time, price bands (e.g. trade static price band, buy/sell static price bands, circuit breakers) at its own and full discretion. This is the participants’ sole responsibility and duty to carefully analyse and understand the specific market schedule and price bands applicable for a given security, digital asset and/or financial instrument before placing an order. Details about the applicable market schedule and price bands are provided in the top banner of the trading screen, by clicking on the “schedule” icon next to the price, and by consulting the “Markets & trading” section of the FAQ. If a participant placed an order and this order was executed, then it is strictly impossible for the participant to request the reversal of a trade. If any price band is set, then any order/trade outside of the price band will be rejected.
- Taurus may use the TDX OTF to trade against its own book, in particular for the purpose of providing liquidity to some market segments and/or acting as a market maker in accordance with Cm. 22 of FINMA Circular 2018/1 “Organised trading facilities”. In such cases, Taurus will publish details once a month, broken down by product category, of the volumes traded via the OTF by participants and on its own account. The maximum daily volume of trading on own account must also be published for the previous month, again broken down by product category.
More information is available in the “Rulebook of the TDX Organised Trading Facility”.