Author Archives: Thomas Werlen
The Regulatory Agenda for 2024 in Switzerland
Changes in the Swiss financial market over the last two years continue to have a profound impact on regulatory initiatives and legislation in Switzerland. Most notably, the Swiss government used its emergency powers to force a takeover of Credit Suisse by UBS in March 2023 after Credit Suisse suffered significant deposit outflows and a loss of market confidence. This extraordinary intervention spurred questions on the effectiveness of the Too-big-to-fail regime and triggered calls for measures to reestablish confidence in the Swiss financial market. Separately, events including the abolishment of negative interest rates, the substitution of the Swiss Franc LIBOR by SARON, scandals in the international crypto markets and an increased international focus on sustainable finance also continue to affect the regulatory agenda.
By René Bösch / Thomas Werlen (Reference: CapLaw-2024-03)
Switzerland’s Quest for a Safe Haven for Crypto Products
Tokens such as cryptocurrencies have caused turmoil in the financial market. Regulators are trying to catch up on the latest developments and adapt 20th century legislation to match up with 21st century technology. In this context, the United States Securities and Exchange Commission (“SEC“) has taken enforcement action against two cryptocurrency exchange platforms, Binance and Coinbase, in an attempt to clarify U.S. law applicable to tokens. The Swiss regulators have taken a more pragmatic approach. This article sets out the current situation in the U.S. and then turns to the legal regime in Switzerland.
By Thomas Werlen / Simon Weber (Reference: CapLaw-2023-39)
Collective Redress in Switzerland and the EU –Where does it stand?
Collective redress has been one of the most debated topics in the field of civil procedure over the last decades in both Switzerland and the European Union. Recently, there have been several new developments: In the European Union, member states are in the process of adopting national laws implementing the EU directive on collective redress, with the deadline for implementation of December 2022 fast approaching. In Switzerland, the Federal Council submitted its proposal for collective redress measures to Parliament in December 2021, where it is currently considered in the legal commissions of both chambers of the Parliament. This article sets out and assesses key points of the Federal Council’s proposal against the background of the collective redress measures in the European Union.
By Thomas Werlen / Konstantin Oppolzer / Jonas Hertner (Reference: CapLaw-2022-16)
LIBOR transition remains fraught with risk
Publication of most LIBOR rates will be discontinued at the end of this year. The effects on financial contracts, which refer to a discontinued LIBOR rate to determine a payment obligation and which have a term that runs beyond discontinuation, are unclear and may depend on the facts surrounding the individual contract. Legislators in key interbank markets have adopted or are in the process of adopting legislation governing LIBOR discontinuation and its legal effect on affected contracts. Switzerland is not adopting such legislation. As a consequence, the situation of parties to affected contracts governed by Swiss law remains unclear, and both sides are exposed to significant (litigation) risk.
By Thomas Werlen / Jonas Hertner / Dusan Ivanovic (Reference: CapLaw-2021-32)
Update: The Enforcement of Clients’ Rights in the Financial Services Act
The Financial Services Act (FinSA) as it will enter into force on 1 January 2020 contains two elements of an initially broad set of proposals meant to strengthen the enforcement of clients’ rights. First, it specifies the scope of records to be kept regarding a service provider’s relationship with a client and gives the client an unambiguous legal basis to obtain a copy of such records on request. Second, it will require all providers of financial services to be affiliated with an ombuds institution. Parliament ultimately opposed the introduction of new procedural mechanisms such as collective action instruments and changes to the ‘loser pays’ rule, referring to ongoing efforts towards a broader reform of the Civil Procedure Code.
By Thomas Werlen / Jonas Hertner (Reference: CapLaw-2019-54)
The Enforcement of Clients’ Rights in the Financial Services Act
The new Financial Services Act will require all providers of financial services to be affiliated with an ombuds institution. This requirement is the only substantially new element remaining from a broad set of proposals to strengthen the enforcement of clients’ rights. Parliament ultimately opposed the introduction of new procedural mechanisms specifically for the financial services industry, such as collective action instruments and changes to the ‘loser pays’ rule.
By Thomas Werlen / Jonas Hertner (Reference: CapLaw-2018-60)
The Proposed Strengthening of Group Action in Swiss Civil Procedure
In Switzerland, plaintiffs are forced to litigate their claims in court individually, even if they are part of a group that is affected by the same underlying damaging event. In the context of the ongoing partial revision of the Civil Procedure Code the Swiss Federal Council is seeking to facilitate actions for damages for large groups. To this end it is proposing amendments to the existing mechanism of a group action through an organization and the introduction of a novel group settlement method.
By Thomas Werlen / Remo Decurtins (Reference: CapLaw-2018-44)
An Update on International Arbitration and Financial Institutions
Unlike other sectors, the financial sector has been reluctant to embrace international arbitration for resolving finance disputes. The ICC Commission on Arbitration and ADR created the Task Force on Financial Institutions to study the concerns of financial institutions. The study’s findings were published in a report in December 2016. This article builds on the findings of said report and provides an update on the status of international arbitration in the financial sector.
By Thomas Werlen / Jascha Trubowitz (Reference: CapLaw-2018-31)
A Brief Overview of the LIBOR Reform
The London Interbank Offered Rate (LIBOR) reform has been an ongoing project for the past several years, proceeding in fits and starts. It seems, however, that the global regulatory community has now finally begun in earnest to plan for a future without LIBOR. Reforming LIBOR is a complicated undertaking, since LIBOR acts as a reference rate to several hundred trillion dollars in both notional value of derivatives and in bonds, loans and securitizations and thus plays a very important role in the global financial market. LIBOR has attained such a unique role because it is calculated for five currencies (USD, GBP, EUR, CHF and JPY) which come in seven maturities (from overnight to 12 months).
By Thomas Werlen / Jascha Trubowitz (Reference: CapLaw-2018-17)
Cross-Border Transactions in Intermediated Securities: Switzerland Maintains its Lead (Part 2/2)
“The transnational nature of collateral goes beyond the mere (but important) fact that the parties to a swap are often incorporated in different jurisdictions. Collateral may be posted in different currencies, or in the form of government bonds issued by different governments. The collateral is held with intermediaries often incorporated in yet other jurisdictions, with places of business in still other locales. These intermediaries book the collateral in computerized ledgers maintained on servers that may be located elsewhere in the world. And if, as is permitted under the law of some countries, the pledgee (the party that receives the collateral) “repledges” the collateral to yet another party to satisfy its own obligations, which then repledges it again, then lawyers are left to make sense of a constant global movement of collateral in and out of accounts in many jurisdictions in terms of legal rules created to address a far more stationary and localized conception of property and contract rights.”
Annelise Riles, Collateral Knowledge: Legal Reasoning in the Global Financial Markets, p. 43 (University of Chicago Press, 2011)
By Thomas Werlen / Matthias Wühler / Jonas Hertner (Reference: CapLaw-2018-02)