¹ This Act governs the requirements for acting as a financial institution.

² Its purpose is to protect the investors and clients of financial institutions and ensure the proper functioning of the financial market.

¹ Financial institutions within the meaning of this Act are as follows, irrespective of their legal form:

a.

portfolio managers (Article 17 paragraph 1);

b.

trustees (Article 17 paragraph 2);

c.

managers of collective assets (Article 24);

d.

fund management companies (Article 32);

e.

securities firms (Article 41).

² This Act does not apply to:

a.

persons who manage solely the assets of persons with whom they have business or family ties;

b.

persons who manage assets solely within the context of employee participation schemes;

c.

lawyers, notaries and their auxiliaries insofar as their activity is subject to professional confidentiality in accordance with Article 321 of the Swiss Criminal Code³ or Article 13 of the Lawyers Act of 23 June 2000⁴, as well as the legal entities into which these persons are organised;

d.

persons who manage assets within the framework of a legally regulated mandate;

e.

the Swiss National Bank and the Bank for International Settlements;

f.

occupational pension schemes and other occupational pension institutions (occupational pension schemes), employer-sponsored foundations (employer-sponsored welfare funds); employers who manage the assets of their occupational pension schemes; employer and employee associations which manage the assets of their association schemes;

g.

social security institutions and compensation funds;

h.

insurance companies as defined in the Insurance Supervision Act of 17 December 2004⁵;

i

public insurance institutions in accordance with Article 67 paragraph 1 of the Federal Act of 25 June 1982⁶ on Occupational Old Age, Survivors' and Invalidity Pension Provision;

j.

banks pursuant to the Banking Act of 8 November 1934⁷ (BankA).

Within the meaning of the present Act, the criterion of a commercial basis is deemed satisfied by an independent economic activity pursued on a permanent, for-profit basis.

¹ The following are subject to the insolvency law measures under Article 67 paragraph 1 provided they are not subject to the bankruptcy jurisdiction of the Swiss Financial Market Supervisory Authority (FINMA) within the scope of the supervision of the individual institution:

a.

group parent companies of a financial group or financial conglomerate which have their registered office in Switzerland;

b.

those group companies which have their registered office in Switzerland and perform significant functions for activities which require authorisation (significant group companies).

² The Federal Council shall set the criteria for assessing significance.

³ FINMA shall identify significant group companies and keep a publicly accessible list of said companies.

¹ Financial institutions under Article 2 paragraph 1 require authorisation from FINMA.

² They may be entered in the commercial register only after authorisation has been granted.

³ Financial institutions in accordance with Article 2 paragraph 1 letter c that are already subject to other equivalent official supervision in Switzerland are exempt from the duty to obtain authorisation.

¹ Authorisation to operate as a bank within the meaning of the BankA⁸ also authorises an entity to operate as a securities firm, a manager of collective assets, a portfolio manager and a trustee.

² Authorisation to operate as a securities firm under Article 41 letter a also authorises an entity to operate as a manager of collective assets, a portfolio manager and a trustee.⁹

³ Authorisation to operate as a fund management company also authorises an entity to operate as a manager of collective assets and a portfolio manager.

⁴ Authorisation to operate as a manager of collective assets also authorises an entity to operate as a portfolio manager.

¹ Any party that meets the conditions set out in this section and the specific conditions that apply to individual financial institutions is entitled to authorisation.

² Portfolio managers and trustees submitting an application for authorisation are required to provide proof that they are subject to supervision by a supervisory organisation in accordance with Article 43a of the Financial Market Supervision Act of 22 June 2007¹⁰ (FINMASA).

³ The Federal Council may define additional authorisation conditions if this is necessary for implementing recognised international standards.

¹ The financial institution shall notify FINMA of any changes in the facts on which its authorisation is based.

² If the changes are of material significance, the financial institution must obtain prior authorisation from the supervisory authority in order to pursue its activity.

¹ The financial institution must establish appropriate corporate management rules and be organised in such a way that it can fulfil its statutory duties.

² It shall identify, measure, control and monitor its risks, including legal and reputational risks, and organise effective internal controls.

³ The Federal Council shall set the minimum organisational requirements to be satisfied by financial institutions, taking into account their different business activities and sizes as well as the risks.

¹ The financial institution must effectively be managed from Switzerland. General directives and decisions within the context of group supervision are excluded if the financial institution forms part of a financial group that is subject to appropriate consolidated supervision by foreign supervisory authorities.

² The persons entrusted with managing the financial institution must be resident in a place from which they may effectively exercise such management.

¹ The financial institution and the persons responsible for its administration and management must provide a guarantee of irreproachable business conduct.

² Moreover, the persons responsible for the administration and management of the financial institution must enjoy a good reputation and have the specialist qualifications required for their functions.

³ Qualified participants in a financial institution must also enjoy a good reputation and ensure that their influence is not detrimental to prudent and sound business activity.

⁴ Persons who directly or indirectly hold at least 10% of the share capital or votes or who can significantly influence its business activity in another manner are deemed to be qualified participants in a financial institution.

⁵ Each person must notify FINMA before directly or indirectly acquiring or disposing of a qualified participation in accordance with paragraph 4 in a financial institution. This mandatory notification also applies if a qualified participation is increased or reduced in such a way as to reach, exceed or fall below the thresholds of 20%, 33% or 50% of the share capital or votes.

⁶ The financial institution shall notify FINMA of the persons who meet the conditions of paragraph 5 as soon as it becomes aware of the same.

⁷ Portfolio managers and trustees are exempt from the requirements of paragraphs 5 and 6.

⁸ Qualified participants in portfolio managers and trustees are permitted to perform management duties

Persons operating primarily in the financial sector may perform the following activities only if they have authorisation as a securities firm as defined in this Act or as a bank in accordance with the BankA¹¹:

a.

underwriting securities issued by third parties and offering these to the public on a primary market on a commercial basis;

b.

creating derivatives in the form of securities and offering these to the public on the primary market on a commercial basis.

¹ The name of the financial institution must not lead to confusion or deception.

² The terms «portfolio manager», «trustee», «manager of collective assets», «fund management company» or «securities firm» may be used, alone or in compound terms, in the company name, in the description of its business purpose or in commercial documents only if the corresponding authorisation has been obtained. The foregoing is without prejudice to Article 52 paragraph 3 and Article 58 paragraph 3.

¹ Financial institutions may delegate a task solely to third parties that possess the necessary skills, knowledge and experience and that have the required authorisations. They shall carefully instruct and supervise the appointed third parties.

² FINMA may make the delegation of investment decisions to a person located abroad subject to an agreement on cooperation and information exchange between FINMA and the competent foreign supervisory authority, in particular if such an agreement is required under the other country's legislation.

A financial institution must notify FINMA before:

a.

establishing, acquiring or closing a foreign subsidiary, branch or representation;

b.

acquiring or surrendering a qualified participation in a foreign company.

Financial institutions that provide financial services under Article 3 letter c of the Financial Services Act of 15 June 2018¹³ (FinSA) must affiliate to an ombudsman as stipulated in the provisions of Title 5 of the FinSA at the latest on assuming their activity.

¹ A portfolio manager is a person mandated to manage assets on a commercial basis in the name of and on behalf of clients within the meaning of Article 3 letter c items 1 to 4 FinSA¹⁴.

² A trustee is a person who on a commercial basis manages or holds a separate fund for the benefit of the beneficiaries or for a specified purpose based on the instrument creating a trust within the meaning of the Hague Convention of 1 July 1985¹⁵ on the Law Applicable to Trusts and on their Recognition.

¹ Portfolio managers and trustees which have their registered office or place of residence in Switzerland must have one of the following legal forms:

a.

sole proprietorship;

b.

commercial enterprise;

c.

cooperative.

² Portfolio managers and trustees must be listed in the commercial register.

¹ The portfolio manager manages individual portfolios.

² The trustee manages the separate fund, ensures its value is maintained and employs it for the specified purposes.

³ Portfolio managers and trustees may also provide the following services in particular:

a.

investment advice;

b.

portfolio analysis;

c.

offering of financial instruments.

¹ The management body of a portfolio manager or trustee entity must consist of at least two qualified persons.

² The management body may consist of only one qualified person subject to proof that continuation of business operations on a going concern basis is guaranteed.

³ A person is deemed qualified to manage business operations if they have received appropriate training in the activities of a portfolio manager or trustee and at the time of assuming management duties has had sufficient professional experience in portfolio management for third parties or within the framework of trusts. The Federal Council shall regulate the details.

¹ Portfolio managers and trustees must have an appropriately defined risk management system in place as well as an effective internal control structure to ensure, among other requirements, compliance with legal and internal provisions.

² The tasks of risk management and internal control may be carried out by a qualified manager or delegated to one or more suitably qualified employees or to a qualified external entity.

³ Persons who carry out the tasks of risk management and internal control may not be involved in the activities which they supervise.

¹ The minimum capital of portfolio managers and trustees must amount to CHF 100,000 and be paid up in cash. The minimum capital requirement must be complied with at all times.

² Portfolio managers and trustees must have adequate collateral or take out professional liability insurance.

³ The Federal Council shall set the amount of collateral and the sum to be insured under professional liability insurance.

¹ Portfolio managers and trustees must have sufficient own funds.

² Own funds must at all times amount to at least one quarter of the fixed costs reported in the most recent annual financial statement and no more than CHF 10 million.

¹ A manager of collective assets is a person who manages assets on a commercial basis in the name and on behalf of:

a.

collective investment schemes;

b.

occupational pension schemes.

² Portfolio managers within the meaning of Article 17 paragraph 1 are:

a.

Managers of collective assets in accordance with paragraph 1 letter a whose investors are qualified within the meaning of Article 10 paragraph 3 or 3^ter of the Collective Investment Schemes Act of 23 June 2006¹⁶ and fulfil one of the following conditions:

1.

The assets of collective investment schemes under their management, including the assets acquired through the use of leveraged finance, amount in total to no more than CHF 100 million.

2.

The assets of collective investment schemes under their management do not exceed CHF 500 million in total and do not include leveraged financial instruments. The collective investment schemes give no right to redemption in the first five years after making the first investment.

b.

Managers of collective assets in accordance with paragraph 1 letter b who manage the assets of occupational pension schemes totalling no more than CHF 100 million and in the mandatory segment manage no more than 20% of the assets of an individual occupational pension scheme.

³ Portfolio managers in accordance with paragraph 2 may request authorisation as managers of collective assets provided this is required by the state where the collective investment scheme is established or offered or where the occupational pension scheme is managed. The Federal Council shall regulate the details.

Managers of collective assets who have their registered office in Switzerland must have the legal form of a commercial enterprise.

¹ Managers of collective assets are responsible for the portfolio and risk management of the assets entrusted to them.

² In addition, managers of collective assets may conduct fund business, in particular, for foreign collective investment schemes. If the foreign country's law requires an agreement on cooperation and information exchange between FINMA and the foreign supervisory authorities of relevance for the fund business, they may perform this business only where such an agreement exists.

³ Managers of collective assets may also perform administrative activities within the scope of these tasks.

¹ Managers of collective assets may delegate tasks to third parties, provided this is in the interests of efficient management.

² Any person who delegates the management of the assets of an occupational pension scheme or collective investment scheme to a manager of collective assets remains responsible for adhering to the relevant investment guidelines.

¹ Managers of collective assets must possess the required minimum capital. This must be fully paid up.

² FINMA may permit managers of collective assets in the form of partnerships to provide appropriate collateral instead of minimum capital.

³ The Federal Council shall regulate the amount of the minimum capital and of the collateral. It may furthermore make the granting of authorisation contingent upon possession of professional liability insurance.

¹ Managers of collective assets must possess an appropriate level of own funds.

² The Federal Council shall set the amount of own funds based on the business activity and the risks.

Where a financial group is dominated by a manager of collective assets or a financial conglomerate is dominated by a manager of collective assets, FINMA may make these subject to group or conglomerate supervision, provided this is in accordance with recognised international standards.

A manager of collective assets shall give advance notice of the assumption of its rights and obligations by another manager of collective assets to the relevant supervisory authority for the collective investment scheme or occupational pension scheme.

A fund management company is an entity that manages investment funds independently in its own name and for the account of investors in accordance with Article 15 paragraph 1 letter a of the Collective Investment Schemes Act (CISA) of 23 June 2006¹⁸ or administers a SICAV in accordance with Article 13 paragraph 2 letter b CISA.

¹ The fund management company must be a company limited by shares that has its registered office and head office in Switzerland.

² The share capital shall be divided into registered shares.

³ The persons managing the fund management company and the custodian bank must be independent of each other's company.

⁴ The main purpose of the fund management company is to conduct the fund business; this consists of the offering of units in the investment fund and its management and administration.

In addition to conducting activities in accordance with the present Act, the fund management company may perform the following other services, in particular:

a.

the safekeeping and technical management of collective investment schemes;

b.

the administration of an investment company with variable capital (SICAV).

¹ The fund management company may not delegate the management of the investment fund to third parties. However, it may delegate investment decisions as well as specific tasks to third parties, provided this is in the interests of efficient management.

² In the case of collective investment schemes for which the facilitated offering of shares exists in the European Union based on a treaty, investment decisions may not be delegated to either the custodian bank or any other companies whose interests may conflict with those of the manager of collective assets or the fund management company or the investors.

¹ The fund management company must possess the required minimum capital. This must be fully paid up.

² The Federal Council shall regulate the amount of the minimum capital.

¹ There must be an appropriate ratio between the fund management company's own funds and the overall assets of the collective investment schemes under its management. The Federal Council shall specify this ratio.

² In special cases, FINMA may ease the requirements, provided this does not adversely affect the protective purpose of this Act, or it may order more stringent requirements.

³ The fund management company may not invest the prescribed level of its own funds in fund units that it has issued itself or lend its own funds to its shareholders or any natural or legal person with whom they have business or family ties. The holding of liquid funds with the custodian bank shall not constitute a loan.

¹ The fund management company is entitled to:

a.

receive the fees stipulated in the fund contract;

b.

an exemption from any liabilities which may have arisen in the course of the proper execution of its tasks;

c.

receive reimbursement of the expenses incurred in connection with such liabilities.

² These payments are made from the assets of the investment fund. Investors are not held personally liable.

¹ The rights and duties of the fund management company may be transferred to another fund management company.

² In order to be effective, the transfer agreement between the outgoing and incoming fund management company must be done in writing or in another form demonstrable by text and must have the consent of the custodian bank and the approval of FINMA.

³ Prior to approval by FINMA, the outgoing fund management company shall give notice of the proposed transfer in the publication media.

⁴ The investors must be informed in these publications of their right to lodge objections with FINMA within 30 days of publication. The procedure is based on the Administrative Procedure Act of 20 December 1968¹⁹.

⁵ FINMA shall approve the change of fund management company if the legal requirements are met and the continuation of the investment fund is in the interest of the investors.

⁶ It shall publish the decision in the publication media.

¹ Article 39 paragraphs 2-6 does not apply to a change in the fund management company of a Limited Qualified Investor Fund (L-QIF) in the legal form of a contractual investment fund.

² In order to be effective, the transfer agreement must be done in writing or in another form demonstrable by text, and must be approved in advance by the custodian bank.

³ The previous fund management company shall give notice of the proposed transfer in the publication media and indicate when the change will take place.

⁴ Publication in accordance with paragraph 3 may be waived if all investors are informed of the transfer and the date of completion of the change in writing or in another form that demonstrable by text.

⁵ The change of fund management company may be completed at the earliest:

a.

in the case of a contractual investment fund with the option of redemption at any time: 30 days after notice in accordance with paragraph 3 or the information in accordance with paragraph 4 is given;

b.

in the case of a contractual investment fund without the option of redemption at any time: on the day after the day on which the units may be redeemed in accordance with the contractual or regulatory redemption periods and deadlines if the fund contract were to be terminated on the 30th day after notice in accordance with paragraph 3 or the information in accordance with paragraph 4 is given.

⁶ If the contractual or regulatory notice period lasts longer than 30 days, execution may take place earlier than required by paragraph 5 if all investors agree in writing or in another form demonstrable by text, but no earlier than 30 days after notice in accordance with paragraph 3 or the information in accordance with paragraph 4 is given.

¹ In the event of the bankruptcy of the fund management company, the following shall be segregated for the benefit of the investors or account holders:

a.

assets and rights belonging to the investment fund, without prejudice to the fund management company's claims under Article 38;

b.

units in collective investment schemes that are credited to unit accounts.²¹

² Debts incurred by the fund management company that do not result from the fund contract may not be set off against claims belonging to the investment fund.

A securities firm is an entity that, on a commercial basis:

a.

trades in securities in its own name for the account of clients;

b.

trades in securities for its own account on a short-term basis, operates primarily on the financial market and:

1.

could thereby jeopardise the proper functioning of the financial market, or

2.

is a member of a trading venue, or

3.²²

operates an organised trading facility under Article 42 of the Financial Market Infrastructure Act of 19 June 2015²³; or

c.

trades in securities for its own account on a short-term basis and publicly quotes prices for individual securities upon request or on an ongoing basis (market maker).

A securities firm that has its registered office in Switzerland must have the legal form of a commercial enterprise.

The provisions of the BankA²⁴ on foreign-controlled banks apply by analogy.

¹ In particular, the securities firm may:

a.

hold accounts for settling securities trade within the context of its activity under Article 41 for clients, either itself or with third parties;

b.

act as custodian of clients' securities, either itself or in its own name with third parties;

c.

underwrite securities issued by third parties as a firm commitment or on commission and offer these to the public on the primary market on a commercial basis;

d.

create derivatives itself on a commercial basis, which it offers to the public on the primary market on its own behalf or that of another party.

² It may accept deposits from the public on a commercial basis within the context of its activity under paragraph 1 letter a.

³ The Federal Council may regulate the use of deposits from the public.

¹ Securities firms must possess the required minimum capital. This must be fully paid up.

² FINMA may permit securities firms in the form of partnerships to post appropriate collateral instead of the minimum capital.

³ The Federal Council shall regulate the amount of the minimum capital and of the collateral.

¹ Securities firms must have sufficient own funds and liquidity individually and on a consolidated basis.

² They must diversify their risks appropriately.

³ The Federal Council shall regulate the risk diversification requirements. It shall set the amount of own funds and liquidity based on the business activity and the risks.

⁴ Where there are legitimate grounds for so doing, FINMA may ease the requirements, provided this does not adversely affect the protective purpose of the law, or it may order more stringent requirements.

⁵ FINMA may issue implementing regulations.

The provisions of the BankA²⁵ on additional capital apply by analogy.

The provisions of the BankA²⁶ on accounting apply by analogy.

¹ Two or more companies are deemed to be a financial group dominated by a securities firm if:

a.

at least one of them operates as a securities firm;

b.

they operate primarily in the financial sector; and

c.

they form an economic unit or other circumstances suggest that one or more of the companies under individual supervision is de jure or de facto obliged to provide assistance to group companies.

² A financial conglomerate dominated by a securities firm is a financial group as defined in paragraph 1 operating primarily in the field of securities trading and comprising at least one insurance company of considerable economic significance.

³ The provisions of the BankA²⁷ on financial groups and financial conglomerates apply by analogy.

The securities firm must keep a record of the orders and transactions it conducts together with all the details necessary for their traceability and for the supervision of its activity.

¹ The securities firm must report all of the information necessary for transparent securities trading.

² FINMA shall regulate which information is to be reported to whom and in what form.

³ Provided this is required for the purposes of the Act, the Federal Council may also impose the reporting duty in accordance with paragraph 1 on persons and companies that buy and sell securities on a commercial basis but without the involvement of a securities firm. Any such company must instruct an audit firm licensed by the Federal Audit Oversight Authority (FAOA) in accordance with Article 9a paragraph 1 of the Auditor Oversight Act of 16 December 2005²⁸ (AOA) to audit compliance with this reporting duty and must inform FINMA.

¹ Authorisation from FINMA is required by financial institutions that have their registered office abroad (foreign financial institutions) and that wish to establish a branch in Switzerland that employs persons who perform any of the following activities in the name of the foreign financial institution on a permanent commercial basis in Switzerland or from Switzerland:

a.

asset management or trustee activities;

b.

portfolio management for collective investment schemes or occupational pension schemes;

c.

securities trading;

d.

conclusion of transactions; or

e.

client account management.

² Foreign fund management companies may not establish branches in Switzerland.

³ The Federal Council may sign international treaties allowing financial institutions from the treaty states to open a branch without requiring authorisation from FINMA if both sides recognise the equivalent nature of the respective regulation of financial institutions' activity and the supervisory measures.

FINMA shall grant the foreign financial institution authorisation to establish a branch if:

a.

the foreign financial institution:

1.

is sufficiently organised and has adequate financial resources and qualified personnel to operate a branch in Switzerland,

2.

is subject to appropriate supervision that includes the branch, and

3.

proves that the business name of the branch can be entered in the commercial register;

b.

the competent foreign supervisory authorities:

1.

do not raise any objections to the establishment of a branch,

2.

undertake to notify FINMA immediately if any circumstances arise that could seriously prejudice the interests of the investors or clients, and

3.

provide FINMA with administrative assistance;

c.

the branch:

1.

fulfils the conditions set out in Articles 9 to 11 and has a set of regulations that accurately describes the scope of business and provides for an administrative or operational organisation corresponding to its business activity, and

2.

fulfils the additional authorisation conditions under Articles 54 to 57.

FINMA may make the granting of authorisation to establish a branch of a foreign financial institution additionally contingent upon a guarantee of reciprocity with the states in which the foreign financial institution or the foreigners with qualified participations have their place of residence or registered office.

Where a foreign financial institution is part of a financial group or financial conglomerate, FINMA may make the granting of authorisation contingent upon it being subject to appropriate consolidated supervision by foreign supervisory authorities.

FINMA may make the granting of authorisation to establish a branch of a foreign portfolio manager, a foreign trustee or a foreign manager of collective assets additionally contingent upon the posting of collateral if so required for the protection of investors or clients.

The Federal Council may make provision for exempting branches of foreign financial institutions from certain provisions of this Act.

¹ Foreign financial institutions require authorisation from FINMA if they employ persons in Switzerland who work for them on a permanent and commercial basis in Switzerland or from Switzerland in another manner than that set out in Article 52 paragraph 1, specifically where these persons forward client orders to them or represent them for marketing or other purposes.

² Foreign fund management companies may not establish representations in Switzerland.

³ The Federal Council may sign international treaties allowing financial institutions from the treaty states to open a representation without requiring authorisation from FINMA if both sides recognise the equivalent nature of the respective regulation of financial institutions' activity and the supervisory measures.

¹ FINMA shall grant the foreign financial institution authorisation to establish a representation if:

a.

the foreign financial institution is subject to appropriate supervision;

b.

the competent foreign supervisory authorities do not raise any objections to the establishment of the representation;

c.

the persons entrusted with its management provide a guarantee of irreproachable business conduct.

² FINMA may make authorisation additionally contingent upon the granting of reciprocity by the state in which the foreign financial institution has its registered office.

The Federal Council may make provision for exempting representations of foreign financial institutions from certain provisions of this Act.

¹ The liability of the financial institutions and their bodies is based on the provisions of the CO³⁷.

² Where a financial institution delegates performance of a task to a third party, it remains liable for any losses caused by the latter unless it proves that it took the due care required in that party's selection, instruction and monitoring. The Federal Council may set out the requirements for such monitoring.

³ The fund management company remains liable for the actions of persons to whom it has delegated tasks in accordance with Article 35 paragraph 1 as if it had performed those tasks itself.

¹ A custodial sentence not exceeding three years or a monetary penalty shall be imposed on any person who wilfully:

a.

discloses a secret entrusted to them in their capacity as a director or officer, employee, agent or liquidator of a financial institution or of which they have become aware in said capacity;

b.

attempts to induce a violation of professional secrecy;

c.

discloses to other persons a secret disclosed to them in violation of letter a or exploits such a secret for their own benefit or for the benefit of others.

² A custodial sentence not exceeding five years or a monetary penalty shall be imposed on any person who obtains a pecuniary advantage for themselves or another person through an action as detailed in paragraph 1 letter a or c.

³ A fine not exceeding CHF 250,000 shall be imposed on persons who commit the foregoing acts through negligence.

⁴ Any person who violates professional confidentiality remains liable to prosecution after termination of the official or employment relationship or exercise of the profession.

⁵ The federal and cantonal provisions relating to the duty to testify and the duty to provide information to the authorities are reserved.

⁶ The cantons are responsible for the prosecution and adjudication of acts under this provision.

A fine not exceeding CHF 500,000 shall be imposed on any person who wilfully:

a.

violates the provision on protection against confusion and deception (Article 13);

b.

fails to provide FINMA with the prescribed notifications in accordance with Articles 11 and 15, or does so incorrectly or too late.

A fine not exceeding CHF 500,000 shall be imposed on any person who wilfully:

a.

violates the record-keeping duty set out in Article 50;

b.

violates the reporting duty in accordance with Article 51.