FINSA’s New Rules for Professional Investors: What You Need to Know

Zurich, Switzerland - The Swiss Financial Services Act (FinSA) has introduced significant changes to the regulation of professional investors in Switzerland. As of January 1, 2020, a new definition of “professional investor” has been implemented, which is more restrictive than its predecessor.

What is a Professional Investor?

Under FinSA, a professional investor is defined as an individual or entity that meets certain criteria, including having a minimum net worth of CHF 500,000 or more. However, even if an investor meets this threshold, they may still be considered a “qualified” investor under the revised Collective Investment Schemes Act (CISA), which allows for some exemptions from the FinSA definition.

Pre-Marketing and Regulation

One key change is the introduction of “pre-marketing,” which allows Swiss financial institutions to test the waters with high net worth individuals without having to appoint a Swiss representative or paying agent. However, even in pre-marketing scenarios, the FINSA rules applicable to marketing still apply, including registration as a client advisor and affiliation with an ombudsman where no exemptions apply.

Regulation of Financial Institutions

The regulatory framework for financial institutions has been consolidated under FinIA, which has introduced new requirements for:

• Portfolio managers: must obtain a license from FINMA and comply with ongoing supervision.
• Asset managers of collective investment schemes: subject to new rules and regulations.
• Fund management companies: must adapt their business practices to comply with the new regulatory requirements.

Transitional Period and Implementation

A transitional period of two years is in place for financial service providers to implement the FinSA conduct and organisational rules, including new client segmentation rules. Managers may choose to implement these rules earlier and enjoy lighter regulation as a result. The new rules limiting the necessity to appoint a Swiss representative and paying agent will come into effect on January 1, 2022.

Conclusion

The changes introduced by FinSA have significant implications for professional investors in Switzerland. While some exemptions remain under CISA, financial institutions must be aware of the new regulatory requirements and adapt their business practices accordingly. As always, it is essential to stay up-to-date with changing regulations and consult with experts when necessary.

Note: This article was written in a style similar to that of a media publication, while maintaining the original content and information provided by Stephanie Comtesse, counsel at Meyerlustenberger Lachenal in Switzerland.