A major reform of the overall Swiss financial markets regulation is underway. As part of the changes, the draft bill of the new Financial Institutions Act (FIA) will affect licensing of institutions active in investment management.
From a technical perspective, FIA will consolidate the rules governing the following regulated institutions in one piece of legislation: banks, fund management companies, securities dealers, and asset managers of collective investment schemes. Further, newly regulated institutions will also be subject to FIA.
The existing regulations on banks are to be largely transferred from the Federal Act on Banks and Savings Institutions (Banking Act) to FIA. Under FIA, a bank will no longer need to obtain either a separate securities dealer licence to trade or a further licence to act as a Swiss representative of foreign collective investment schemes. According to a press release from the Swiss Federal Department of Finance dated March 2015, parts of the Banking Act will nevertheless remain in force.
Under FIA, securities dealers will be renamed securities houses. The rules applicable to them under the Stock Exchange and Securities Trading Act (SESTA) will be incorporated in the new legislation.
The proposed FIA is to include the licensing conditions for fund management companies as set out in the Swiss Collective Investment Schemes Act (CISA). However, even under FIA, a licence will not enable a bank or a securities house to carry out fund management activities.
The existing provisions of CISA regulating asset managers of collective investment schemes will also move to FIA, without any major material changes. However, asset managers of collective investment schemes will fall into a new category of regulated entities called qualified asset managers. This category will further include asset managers of pension schemes that will become subject to a licensing obligation under FIA.
Independent asset managers (also known as portfolio managers) that do not manage collective investment schemes are as yet not subject to any licensing obligation or to prudential supervision. They are only subject to anti-money laundering legislation. Under FIA, they will need to apply for a licence and will be subject to the prudential supervision of a newly created supervisory body.
Stephanie Comtesse and Tina Balzli