FIDLEG SOLUTION - News 9/2019

Presumptive Entry into force on 1 January 2020 with extended transitional period

THE CURRENT STATUS OF THE ACTS AND ORDINANCES

MiFID II / MiFIR (collectively referred to as „MiFID II“) entered into force on 3rd of January 2018. The Financial Services Act (FinSA) and Financial Institutions Act (FinIA), which are supposed to bring Swiss law on a level, which shall be equivalent to MiFID, have been adopted by Swiss Parliament on 15th June 2018. No referendum had been called. You find the final versions of these acts on the FIDLEG SOLUTION website here.

And on 24 October 2018, the Swiss Federal Council released the drafts of the following implementing ordinances:

  • Financial Services Ordinance (FIDLEV)
  • Financial Institutions Ordinance (FINIV)
  • Supervisory Organisation Ordinance (SSO)

The consultation period expired on 6 February 2019. You may find a first analysis of these draft ordinances in our FIDLEG SOLUTION - News 10/2018 here. The final versions are expected to be released in November 2019.

The Swiss Federal Council has not yet resolved on the entry into force of these acts and the ordinances. In the last days, the State Secretariat for International Finance (SIF) called for a short-term consultation with a limited number of addressees on this topic. The reason for this short-term consultation is that the repeal of existing provisions principally in the area of collective investment schemes and the presumed transitional periods for the new provisions in FinSA and FinIA may lead to loopholes and uncertainties.

THE PROPOSED RULES ON THE ENTRY INTO FORCE

Based on this consultation, the SIF has apparently come to the conclusion to request the Swiss Federal Council to resolve on an entry into force of FinSA and FinIA on 1st January 2020 but to extend the transitional period to two years, i.e. until 31st December 2021 for the following provisions:

  • Art. 103 FIDLEV: This relates to the client segmentation, i.e. the categorisation into private clients, professional clients and institutional clients as per art. 4 – 5 FinSA.
  • Art. 104 FIDLEV: This relates to the proof of the required knowledge by Client Advisors as per art. 6 FinSA.
  • Art. 105 FIDLEV: This relates to the following duties of financial services providers:
    • the duty to provide information as per art. 8 – 9 FinSA;
    • the duty to assess appropriateness and suitability as per art. 10 – 14 FinSA;
    • the duty of documentation and rendering of account as per art. 15 – 16 FinSA
  • Art. 106 FIDLEV: This relates to the requirements on the organisation of financial services providers as per art. 21 – 27 FinSA.
ADVANTAGES AND DISADVANTAGES

This definitively grants an extended transitional period for the implementation of all new duties such as the client segmentation, which is welcomed. However, the market participants who already have to comply with similar duties, are left in the dark from 1 January 2020 onwards, until all details of the new rules are known. As a general rules, this applies to the code of conduct rules of the current CISA-regulated entities. They are released from applying the code of conduct rules set forth in the CISA from 1 January 2020 onwards, as these rules are repealed but they have two years’ time to apply the code of conduct rules set forth in FinSA. However, this shouldn’t be read that no code of conduct rules have to be applied during two years.

THERE IS MORE TO COME…

Your FIDLEG SOLUTION Team
www.fidlegsolution.ch


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