SWISS COMMODITIES HUB
Market Share of Geneva-Based Commodity Traders OIL 5 15 20 35 20 25
35% .... Lake Geneva region 25% .... London 20% .... New York, Houston 15%.... Singapore 5%.... Others
COFFEE 10 5 5 50 20 10
50% .... Lake Geneva region 10%.... Zurich/Winterthur 20% .... Hamburg 5%.... Singapore 5%.... New York 10%.... Others
Source: Berne Declaration
the whole range of financial products that the commodity sector and related businesses require. Moreover, Karrer insists that Switzerland has a “reasonable” track record of both effective and efficient regulation, with its comparatively tight capital requirements for systemically important banks enhancing the resilience of the financial system to future shocks.
20
50% .... Lake Geneva region 20%.... London 15%.... Paris 15%.... North and South America
15 50 15 15 10 20
35% .... Lake Geneva region 20%.... Singapore 10%.... The rest of Europe 15%.... North and South America 20%.... Others
SUGAR 35 GRAINS, OILSEEDS
and at the same time ensuring full implementation of international regulatory standards. The most often thought of reasoning
for doing business in Switzerland is, of course, taxation. Certainly, Swiss tax levels for companies and employees are moderate, but certainly NOT the lowest internationally. Indeed, this is reflected in Switzerland’s sound public finances, with the general government running surpluses over the last six years. Todays debt-to-GDP ratio is an impressive 40% (at least by OECD standards). And let’s not forget the quality and
educational standard of the labour force. Switzerland’s educational system is known both for the quality of its universities and outstanding vocational training. “Equally important, Switzerland has an open and competitive job market that enables firms to hire the specialists they need,” says Karrer. This education and training is also offered as specifically targeted programs for commodity businesses such as the Master in International Trading, Commodity Finance and Shipping qualification set up by the University of Geneva in collaboration with the Geneva Trading and Shipping Association. Last, but not least, Switzerland is also
well known for its first-class infrastructure and quality of life. “So the attractiveness of Switzerland as a location for the commodity industry does not depend on a single factor but rather on a mixture of elements,” insists Karrer. This success in not due to a specific industrial policy, but rather a general political, social, economic and legal framework for doing business.
Challenges Ahead The commodity sector is not only of great significance for
This success in not due to a specific industrial policy, but rather a general political, social, economic and legal framework for doing business
Another pillar of Switzerland’s success is the general political, economic and legal framework offered to commodity companies and investors. This is especially true in the context of predictability. Investors dislike anything more than uncertainty, which is why the Swiss Government strives to maintain a stable and predictable framework,
78 June 2012
Switzerland, but the world economy as a whole. This is why the volatility, financialisation and transparency of commodity markets has taken centre-stage with policymakers. In physical markets, transparency comprises more
accurate, disaggregated and transparent information on stocks, production, and the movement of commodities that is systematically collected and
published. On top of this, specific efforts to improve the regulatory framework for commodity derivatives now requires global coordination. After all, commodity markets are global, so it’s best to tackle the challenges at a global scale – in theory at least. In this regard, Swiss authorities are supportive of the
international reform agenda and are actively contributing to discussions in relevant international financial bodies. At the national level, Switzerland is also conducting preparatory work in proposing necessary legislative changes regarding the over- sight of OTC markets. However, unlike other areas of finance,
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