FIDLEG SOLUTION - News 6/2018

The impact of the de-minimis-rule on Swiss Asset Managers of collective investments

INTRODUCTION

This issue of FIDLEG SOLUTION – News 6/2018 discusses the de-minimis rule on Swiss Asset Managers of collective investments.

WHAT IS STIPULATED BY FINSA AND FINIA

During the summer session of the Swiss Parliament between 28 May and 15 June 2018 the remaining differences of the drafts of the Financial Services Act (FIDLEG; FinSA) and the Financial Institutions Act (FINIG; FinIA) will be discussed, presumably the remaining differences will be resolved and final drafts laws will be adopted.

As it is already provided by the Collective Investment Schemes Act (CISA), the FinIA provides a de-minimis-rule, according to which managers of collective investment schemes, who manage collective investment scheme assets of up to CHF 100 million (including leverage) or a maximum of CHF 500 million (without leverage and without a right of redemption in the first five years), are exempted from the requirement of obtaining a FINMA license as a manager of collective assets. In addition hereto, managers of pension fund assets are also exempted, provided that the pension fund assets under management do not exceed CHF 100 million and for mandatory occupational pension schemes, a maximum of 20% of the assets of an individual pension fund are managed.

However, managers of collective investments (collective investment schemes or pension schemes), which are subject to the de-minimis-rule, are not entirely exempted from the licensing requirement. Going forward, they shall be treated as asset managers (of individual assets) and therefore they shall be monitored by a light-touch regulatory regime.

Furthermore, investors of collective investment schemes managed by a subthreshold manager must qualify as qualified investors pursuant to the definition of CISA.

WHAT'S NEW?

Due to the wording and the interpretation of the relevant provisions of FinIA and CISA, the de-minimis-rule shall no longer apply only to managers of foreign collective investment schemes, but from now on also to managers of Swiss collective investment schemes.

According to currently applicable law, asset managers of collective investment schemes which fulfil the conditions for being exempted pursuant to art. 2 para. 2 lit. h CISA, are not subject to the rules of CISA, even if the de-minimis-rule is not limited to asset managers of foreign collective investment schemes. Art. 31 para. 3 CISA provides that, in the case of Swiss collective investment schemes, investment decisions may only be delegated to asset managers of collective investment schemes that are subject to a supervisory authority recognized by FINMA. Against this background FINMA argued that the current de-minimis-rule under CISA shall be limited to asset managers of foreign collective investment schemes (FINMA Information 48 [2013], p. 3).

This de-minimis-rule pursuant to art. 2 para. 2 lit. h CISA is basically transposed to the new law for managers of collective investments in art. 20 FinIA. However, the scope of art. 20 para 2 FinIA is not limited to asset managers of foreign collective investments. Thus, the de-minimis-rule will apply to all managers of collective investments and therefore also to pension schemes, which also act as managers of Swiss collective investments.

Art. 31 para. 3 CISA, according to which investment decisions for Swiss collective investment schemes may only be delegated to supervised asset managers, remains unchanged. Following the above mentioned line of argumentation, this requirement is met by de-minimis-asset managers under art. 20 FinIA too, as a de-minimis-asset manager of Swiss collective investment schemes is subject to a recognized supervision as an asset manager of individual assets under FinIA.

CONCLUSION

The de-minimis-rule for asset managers of collective investment schemes is basically transposed from CISA to the FinIA. The new rules will be stricter in that sense that asset managers of collective investment schemes, which fulfil the requirements of the de-minimis-rule under CISA, will be subject to the supervisory regime of FinIA – in a same way as any other asset manager (of individual assets) under FinIA. However, the regulatory requirements are considerably lighter than for asset managers of collective investments subject to the licensing requirement under FinIA. Furthermore, a regulatory easing is provided by the fact that going forward not only asset managers of foreign collective investment schemes can benefit from the exception, but also asset managers of Swiss collective investment schemes.

Furthermore, we are of the opinion that asset managers of collective investment schemes, subject to the new de-minimis-rule, may manage more assets exceeding the thresholds of the de-minimis requirement – in the context of managing (additional) individual assets. Finally, it remains to be seen whether the assets of asset managers managing both collective investment schemes and assets of pension schemes must be cumulated for the calculation of the thresholds under the de-minimis-rule of FinIA.

THERE IS MORE TO COME…

The next issue of the MiFID II series of FIDLEG SOLUTION – News 7/2018 shall discuss the rules on retrocessions under MiFID II.

Your FIDLEG SOLUTION Team
www.fidlegsolution.ch


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