Author Archives: Rashid Bahar

Outsourcing: FINMA Publishes a New Circular 2018/3 on Outsourcing for Banks and Insurance Companies

On 5 December 2017, the Swiss Financial Market Supervisory Authority FINMA published its new circular 2018/3 Outsourcing – Banks and Insurance Companies. In contrast to the current rules, the new circular not only covers banks and securities dealers but is also applicable to insurance companies. The main changes are a more flexible definition what constitutes outsourcing based on a case-by-case analysis factoring in the business model and risk profile of each institution, a more differentiated approach to intra-group outsourcing, and a focus on supervisory issues, leaving data protection and banking secrecy out of the scope of the FINMA circular. The new rules entered into force on 1 April 2018.

By Rashid Bahar / Martin Peyer (Reference: CapLaw-2018-16)

Something old, something new and some things change – FinIA Update

After a long wait in the Committee on Economic Affairs and Taxation, the Council of States, the upper chamber of the Swiss parliament, approved in its 2016 winter session the bill for a Federal Act on Financial Institutions (FinIA) as well as amendments of other statutes, such as the Federal Act on Banks and Saving Banks of 8 November 1934 and the Federal Act on the Swiss Financial Market Supervisory Authority of 22 June 2007. This approval allows this bill to move forward to the National Council, the lower chamber of the Swiss parliament.

Overall, the bill on the FinIA and its schedules, as approved by the Council of States, remains close to the draft bill presented by the Federal Council (see CapLaw-2016-7). Most changes seek to clarify the project rather than challenge fundamentally the initial proposal. Two exceptions deserve, however, further attention: first, the Council of States refused to create a framework for a new supervisory authority solely responsible for supervising portfolio managers. Instead, it opted to draw a line between day-to-day supervision, which is due to be entrusted to a new supervisory authority, who in turn can rely on the work of audit firms or carry out their own reviews, and more supervisory actions such as licensing and enforcement action, which will remain with FINMA.

By Rashid Bahar (Reference: CapLaw-2017-06)

Bail-in Recognition Clause

This paper intents to outline the purpose and scope of article 55 of the European Bank Resolution and Recovery Directive, to present, as an example, the Bail-In Recognition Clause suggested by the Loan Market Association, and to discuss the legal nature of such a clause in a Swiss law governed agreement or document.

By Rashid Bahar (Bär & Karrer), Jürg Frick (Homburger), Theodor Härtsch (Walder Wyss), Marco Häusermann (Niederer Kraft & Frey), Patrick Hünerwadel (Lenz & Staehelin), Stefan Kramer (Homburger), Patrick Schleiffer (Lenz & Staehelin), Bertrand Schott (Niederer Kraft & Frey), Roland Truffer (Bär & Karrer) and Lukas Wyss (Walder Wyss (Reference: CapLaw-2016-44)

Something Old, Something New: The Supervision of Financial Intermediaries under the Draft Federal Act on Financial Institutions

On 4 November 2015, the Federal Council published a Bill to parliament for a Financial Services Act (FinSA) and a Financial Institutions Act (FinIA). As expected, the FinIA proposes to revise the regulatory architecture for financial institutions. Instead of the current sectorial approach, the FinIA proposes to introduce a regulatory pyramid with a light regulatory framework for asset manager and trustees, and an increasingly more stringent regime for collective asset, securities houses and, at the top, banks.

By Rashid Bahar (Reference: CapLaw-2016-7)

Regulation of Financial Market Infrastructures under the preliminary draft for a Financial Market Infrastructure Act

As the consultation period for the preliminary draft of a Financial Market Infrastructure Act (E-FinfraG) reached its term, we survey the proposed regulation of providers of financial market infrastructure services. This new framework complements the regulation of over-the-counter derivatives described in previous articles (see CapLaw-2014-5 and CapLaw-2014-6).

By Rashid Bahar/Roland Truffer (Reference: CapLaw-2014-13)

Market Abuse and Takeover Law – A New Start under Swiss Law

Market Abuse and Takeover Law – A New Start under Swiss Law

On 28 September 2012, the Swiss parliament passed a bill amending the Stock Exchange Act (SESTA). The amendment, which is due to enter in force on 1 April 2013, introduces fundamental changes to market abuse and takeover law, as well as other minor revisions of Swiss securities laws: it overhauls the market abuse regulations by introducing a new administrative enforcement regime and introducing heavier criminal sanctions for insider dealing and market manipulation. Second, it extends the scope of application of Swiss takeover law and disclosure rules, while introducing a strict regime of equal treatment of investors in connection with mandatory bids.

Accounting to Clients for Trailer Fees and Inducements— The Decision of the Swiss Supreme Court 4A_127/2012 and 4A_141/2012 of 30 October 2012 and its Regulatory Consequences

In a recent decision of 30 October 2012, the Swiss Supreme Court held that banks are, as a matter of principle, obliged to account to their clients for inducements and trailer fees they received in connection with portfolio management agreements. Moreover, in the wake of this decision, FINMA issued guidance to all banks requiring them to inform all affected clients of this decision and implementing appropriate procedure to respond effectively to client claims.