The impact of EMIR Refit on Swiss-based entities as parties to OTC derivative contracts with EU-based counterparties and for Swiss banks that have affected corporate clients

It was expected, or at least there was wishful thinking, that MiFID II (2014/65/EU)
and GDPR (Regulation (EU) 2016/679) would be the regulatory summit for our
high mountain region. However, the European Regulator is continuing to pursue
its overall goal of strengthening the regulatory framework in the European Union,
which, in turn, is having a major impact on the Swiss financial industry.

In 2017, the Swiss Financial Market Authority (FINMA) declared its intent to grant certain exemptions and preferential rules to particularly solid small banks. FINMA’s underlying idea is to reduce the regulatory burden, which has been increasing ever since the 2008 financial crisis, for small banks with above-average capitalisation and high liquidity.

Switzerland is about to introduce the next generation of DLT legislation that ensures that it will keep its reputation as most DLT friendly nation in the world. As the DLT markets mature, the regulatory focus is shifting from primary markets to secondary markets. The new proposed Swiss legislation, subject to consultation until 28 June 2019 and likely to enter into force on 1 January 2020, is addressing one of the most important missing parts in the DLT regulatory infrastructure – the regulatory and legal framework of the secondary markets for security tokens.

Switzerland is about to introduce the next generation of DLT-legislation that ensures that it will keep its reputation as most DLT-friendly nation in the world. As the DLT-markets mature, the regulatory focus is shifting from primary markets to secondary markets. The new proposed Swiss legislation that is subject to consultation until 28 June 2019 and likely to enter into force on 1 January 2020 is addressing one of the most important missing parts in the DLT-regulatory infrastructure – the regulatory and legal framework of the secondary markets for security tokens.

The Swiss Federal Council’s plan to improve the attractiveness of Switzerland as a financial centre for the fund industry is beginning to take shape. The idea is to introduce a Swiss fund type for institutional investors that does not require authorisation by the Swiss Financial Market Supervisory Authority FINMA.

The changes introduced by the new regulatory framework for the Swiss financial markets impact trade assayers. They will be supervised by new institutions and will need to introduce organisational measures, and some will need to apply for authorisation with FINMA. This paper gives an overview on how trade assayers are embedded in the new regulatory framework and how to cope with the upcoming duties.

FINMA provisionally recognises the UK provisions on clearing, reporting, and risk mitigation as equivalent to the Swiss ones. This is the first step towards enabling market participants to comply with the Swiss derivatives regulation by fulfilling the corresponding UK obligations.

Under the Financial Services Act (FinSA), client advisors must know the FinSA Code of Conduct and display the ability to perform competently. To ensure that this is the case, PwC has devised a test that has become the new benchmark for financial service providers.

The financial services industry will see some new regulations and requirements in 2020. For the first time, investment advisors will have to be entered in a client advisor register. They will also be required to affiliate themselves with an ombudsman. These and other changes are coming with the Swiss Financial Services Act.

As the Swiss FinTech industry grows rapidly, uncertainty spreads across the traditional banking industry. Should Swiss banks do business with blockchain companies? On 20. September 2018, the Swiss Banker Association has published compliance related guidelines.

The rules and provisions under the new Swiss Financial Institutions Act (FinIA) will have an impact on proprietary traders in securities as participants to trading venues. Entities that have so far not been subject to regulation will need to become licenced as investment firms.