Author Archives: Patrick Schärli

Supervision of Portfolio Managers and Trustees

Under current Swiss law, portfolio managers and trustees are not subject to a comprehensive prudential supervision, a situation that will change under the recently passed new Financial Institutions Act (FinIA). After the Swiss parliament passed the new legislation in June 2018, the Swiss Federal Department of Finance released its draft implementing ordinance (Draft-FinIO) for consultation. Under the new legislation, portfolio managers and trustees will have to apply for a license from the Swiss Financial Market Supervisory Authority (FINMA) and they will be subject to ongoing prudential supervision by new supervisory organizations. The FinIO specifies the license requirements for portfolio managers and trustees, taking into account the nature of these businesses and providing a certain amount of flexibility with respect to the requirements to be fulfilled by smaller businesses. While the new rules will come as a challenge for many of the existing portfolio managers and trustees, the FinIA and the FinIO also provide for transitional periods allowing these existing portfolio managers and trustees to transition gradually into the new regulatory regime.

By Patrick Schleiffer / Patrick Schärli (Reference: CapLaw-2018-65)

New Reporting Obligations for Securities Dealers and Participants of Swiss Trading Venues

On 1 January 2018, FINMA’s new circular 2018/2 on the reporting of securities transactions (“FINMA Circular 18/2”) entered into effect. The purpose of FINMA Circular 18/2 is to implement the reporting obligations set out in the Swiss Financial Market Infrastructure Act (“FMIA”) and to further regulate technical aspects of the reporting obligations. Compared to the previously existing reporting obligations, the FMIA and FINMA Circular 18/2 will bring about a number of significant changes, including the reporting of certain derivatives transactions and reporting of beneficial owners.

By Patrick Schleiffer / Patrick Schärli (Reference: CapLaw-2018-14)

New Rules for Organized Trading Facilities

While the concept of organized trading facilities has been introduced into Swiss law more than one and a half year ago, many of the rules applying to organized trading facilities will only be phased in by the beginning of 2018. Similarly, the Swiss regulator, the Swiss Financial Market Supervisory Authority FINMA, has only recently published regulatory guidance on the rules applicable to organized trading facilities. Such rules and regulatory guidance will start applying from January 1, 2018.

By Patrick Schleiffer / Patrick Schärli (Reference: CapLaw-2017-44)

Supervision of Portfolio Managers and Trustees – Update

Under current Swiss law, portfolio managers, unless they are acting as asset managers for collective investment schemes, and trustees are not subject to a comprehensive prudential supervision, a situation that will change under the proposed new Financial Institutions Act (“FinIA”). On 14 December 2016, this proposed new act took the first parliamentary hurdle when the Swiss Council of States deliberated and passed the new act. Compared to the draft bill published by the Swiss government in November 2015 (see CapLaw 2016-8), the draft FinIA now passed by the Swiss Council of States includes a number of significant changes to the new supervisory framework applicable to portfolio managers and trustees. Most notably, portfolio managers and trustees will have to apply for a license with the Swiss Financial Market Supervisory Authority (FINMA), while the ongoing (day-to-day) prudential supervision of these financial institutions will fall within the responsibility of new private supervisory organizations.

By Patrick Schleiffer / Patrick Schärli (Reference: CapLaw-2017-07)

ESMA Issues Positive Advice on the Extension of the AIFMD Marketing Passport to Swiss AIFM and AIF

On July 19, 2016, the European Securities and Markets Authority (“ESMA”) published its revised advice to the European Parliament, the European Council, and the European Commission on the extension of the AIFMD marketing and management passport (“AIFMD Passport”) to certain non-EU alternative investment fund managers (“AIFM”) and alternative investment funds (“AIF”). With respect to Switzerland, ESMA confirmed its earlier positive advice and concluded that that there are no significant obstacles impeding the potential application of the AIFMD Passport to Switzerland. While this positive advice is an important step towards passporting for non-EU AIFM and AIF, it is now up to the European institutions (Parliament, Council, and Commission) to decide, based on ESMA’s advice, whether or not the AIFMD Passport will be extended to third-countries such as Switzerland.

By Patrick Schärli (Reference: CapLaw-2016-32)

Supervision of Portfolio Managers and Trustees

Under current Swiss law, portfolio managers, which are not acting as asset managers for collective investment schemes, and trustees are not subject to a comprehensive prudential supervision. Portfolio managers and trustees are only required to register with a self-regulatory organization in order to comply with Swiss anti-money laundering laws. Other financial services providers, most notably banks, have criticized this lack of regulatory oversight. Furthermore, the current Swiss regulatory framework for portfolio managers is not in line with international regulatory standards, such as the EU/EEA’s Markets in Financial Instruments Directive (MiFID). This situation is about to significantly change under the proposed new Financial Institutions Act (FinIA). This new act will subject the approximately 2,300 portfolio managers to authorization requirements and comprehensive supervision by a FINMA-approved supervisory organization.

By Patrick Schleiffer / Patrick Schärli (Reference: CapLaw-2016-8)