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Switzerland Needs Regulatory Overhaul to Boost Transparency and Competitiveness
Geneva, Switzerland - In the wake of recent market fluctuations and regulatory concerns, Switzerland is poised for a significant overhaul of its financial regulations. The country’s financial authorities are working on a series of amendments aimed at improving transparency in markets, removing loopholes, and enhancing competitiveness.
Key Areas of Focus
- Introduction of a Limited Qualified Investor Fund (L-QIF)
- Revision of the Insurance Oversight Act
- Sustainable finance initiatives
- FinTech and crypto developments
- Other regulatory updates
Limited Qualified Investor Fund
The revised Collective Investment Schemes Act is set to introduce an innovative fund product called L-QIF, exempt from FINMA supervision. This move is expected to boost competitiveness in the financial sector, making Switzerland more attractive for investors.
Insurance Oversight Act Revision
A review of the Insurance Oversight Act is underway, with a focus on enhancing risk management and improving market stability. The revisions aim to ensure that insurance companies operate safely and efficiently.
Sustainable Finance Initiatives
Switzerland is committed to promoting sustainable finance practices. Recent developments include a report by the Federal Council identifying areas requiring action in the FinTech space. A legislative proposal is expected to address these gaps, including the regulation of responsibilities and risks in digital finance markets.
FinTech and Crypto Developments
The State Secretariat for International Finance (SIF) is drafting a legislative proposal to review the existing legal and supervisory framework for FinTech and crypto assets. The proposal will examine whether FinTech licenses for payment service providers, including stablecoin, and for providers of crypto assets should be amended.
Other Regulatory Updates
- Transition from CHF LIBOR to SARON
- Legislative proposal on transparency in legal entities and beneficial owners aimed at combating money laundering and terrorism financing
Conclusion
Switzerland’s financial authorities are working diligently to improve regulatory frameworks, enhance competitiveness, and promote sustainable finance practices. As the country’s finance minister observed, the recent Credit Suisse crisis was not a failure of existing regulation but rather a crisis of confidence. Regulatory restraint is essential, and individual principle-based adjustments may suffice. A pragmatic awareness of the resilience of financial markets is crucial in navigating uncertain terrain where crises emerge.
About the Authors
René Bösch and Thomas Werlen are experts in financial regulatory matters at Homburger and Quinn Emanuel Switzerland, respectively. They have extensive experience advising clients on financial regulatory issues and have been closely monitoring developments in Switzerland’s financial sector.