After reorganisations that took several years, Switzerland, in the midst of the worldwide financial crisis, reorganised the supervision of its financial markets. On January 1 2009, the Federal Act on the Swiss Financial Market Supervisory Authority (Finmasa) became effective. With its implementation the Swiss Federal Banking Commission (SFBC), the Federal Office of Private Insurance and the Anti-Money Laundering Control Authority (AML Control Authority) have been merged into one single authority, the Swiss Financial Market Supervisory Authority (Finma). As of that date Finma has become the legal successor of these three merged authorities, whereby existing agreements and pending business was taken over by Finma.
Finmasa is an up-to-date organisation (in the legal form of a public institute) and aims at strengthening confidence in the smooth functioning, competitiveness and integrity of Switzerland's financial industry, a branch of the economy that provides 12% of GDP and 200,000 jobs. Finmasa functions as an umbrella law for the existing acts that regulate the Swiss financial market: the Banking Act, Stock Exchange Act, Collective Investment Schemes Act, Insurance Supervision Act, Federal Insurance Contract Act, Anti-Money Laundering Act and Mortgage Bond Act (Financial Market Acts). Finma is an independent authority whose main task is to protect any participants in the financial market, namely creditors, investors and insured persons. It is designed to ensure the proper functioning of the financial market (article five of Finmasa) by setting out principles governing financial market regulation, liability rules, harmonised supervisory instruments and sanctions. Finmasa formally introduced supervisory instruments, which previously existed in practice only, for example the declaratory ruling of Finma in case of serious violation of supervisory provisions (article 32).
The Financial Market Acts remain mostly unchanged. The banks, securities dealers, stock exchanges, insurers and collective investment schemes will continue to be bound by their provisions. Furthermore, the Finmasa only applies if the Financial Market Acts do not provide otherwise (article two). One material change has been introduced to the Federal Stock Exchange Act. Its newly implemented article 33a et seq. set out that the Takeover Board has the power to issue orders necessary for the enforcement of the provisions concerning public takeover offers, whereas previously orders were issued by the Federal Banking Commission only.
The system of self-regulation which was also put into practice in the Anti-Money Laundering Act and the Stock Exchange Act will not be abolished under the Finmasa. In practice there are three forms of self-regulation: self-regulation based on private autonomy only, self-regulation that has been recognised by Finma as a minimum standard, and compulsory self-regulation, which applies in cases where the legislator delegates its own tasks to a self-regulatory organisation. It remains to be seen whether the concept of self-regulation (which, so far, has been rather successful in practice) will survive the storms of the financial crisis.
It is expected that the implementation of the Federal Act Finmasa will abbreviate the introduction of further financial market legislation as similar or identical financial market instruments can be regulated in the same act and for all areas. With the establishment of one single authority the institutional structure of the supervisory bodies has been enhanced and the financial market supervision strengthened.
Sonja Brunner and Daniel Stoll
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