Swiss asset management: overview

With its outstanding history of financial market operation, Switzerland is one of the leading countries in the domain of asset managing. Asset management companies in Switzerland constitute literally the core pillar of its financial center. Read on to find out the main peculiarities of this industry.

Overview of asset managing in the Swiss jurisdiction

The domain of asset managing in this jurisdiction includes multiple business models: big banks acting as wealth managers co-exist with a plethora of small niche participants. The lion’s share of the financial industry is represented by asset managing firms with bounded regulative supervisiοn. However, in 2020, this condition substantially altered with the introduction of two standardsetters – FinIA and FinSA. These new provisions of law drastically amend the level of administration and supervisiοn of the operation of asset managers who are now under the remit of legal structure.

Current issues to the Swiss field of asset managing include a number of regulative amendments taking place in the EU. Respectively, the country’s financial legislation is being constantly changed aiming to coincide to common norms practicable in the EU states and to strengthen the security of market participants.

Overview of a regulative basis

In general, in Swiss jurisdiction, there is no one license covering all financial facilities. Some activities must be licensed, while others can be implemented without mandatory authorizations. By the practicable law, the financial organizations, that must get licensed and be under continuous regulative oversight by FINMA, include:

• Banking institutions;
• insurances;
• stock broker’s business;
• fund, mutual assets and asset managing and trust businesses.

Swiss jurisdiction is not an EU or EEA member but is part of the single market platform. Hence, EU law does not refer in a direct way to operations with finances executed in the Swiss jurisdiction.

The recently established regime for asset managing constitutes an example of the regulative adaptations implemented in the country to stay compliant with international rules. The FinSA framework is a significant change both for local and foreign companies catering to Swiss-based clientele.

Thus, the provision of Swiss asset management is executed under the following conditions stipulated by the FinSA:

• categorization of customers into such segments as institutional, professional, and retail;
• full adherence to regulative obligations and organizational norms;
• the affiliation with an ombudsperson office; and
• registering customer advisory providers.

Another interesting point is the issue of retrocessions, a commission paid to financiers, also called finder’s fees, kickbacks, and soft dollars. Grounding on the updates in the legal and regulatory domains occurring internationally, Switzerland’s asset management sector is now changing its remuneration system to be less reliant on such type of inducement. However, opposite to the EU’s current regulation, retrocessions are legit albeit more limited.

If you have any questions regarding Swiss asset management, contact us. Our experts have tremendous expertise.

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