Asset Managers of Collective Investment Schemes

The CISA applied to the following collective investment managers:

• Managers of Swiss collective investment schemes;
• Managers of foreign collective investment schemes, unless the following conditions were  met (Art. 2 para. 2 let. h CISA):
  • the investor base is limited to qualified investors; and
  • the total assets of the managed open collective investment schemes do not exceed CHF 100 million; or
  • total assets of the managed closed collective investment schemes do not exceed CHF 500 million and no financial instruments with a leverage effect are used.

An asset manager of foreign collective investment schemes who met the above exception criteria was not regulated (except in the anti-money laundering area). The CISA permitted a voluntary subordination of managers to FINMA supervision if the country in which the managed collective investment scheme was set up or marketed so required (Art. 2 para. 2bis CISA).

No. Asset managers of collective investment schemes are regulated by the FinIA; they will also have to comply with the requirements of the FinSA.

No, the law divides the collective investment scheme managers into two groups: “Asset managers” according to Art. 17 f. FinIA and “managers of collective assets” according to Art. 24 f. FinIA.”

An asset manager (Art. 17 f. FinIA) in the collective investment space is anyone who:

• for the collective investment schemes managed by it, only permits “qualified investors” within the meaning of Art. 10 para. 3 or 3ter of the revised CISA (“R-CISA”), such revision to occur in the context of the enactment of FinSA&FinIA. Qualified investors are, thus, on the one hand, institutional and professional clients as well as wealthy private individuals who opt-out of retail client protection pursuant to Art. 4 f. of the FinSA (cf. “Client segmentation“); further, “qualified investors” are asset management and investment advisory clients pursuant to Art. 10 para. 3ter R-CISA; and
• manages total assets of open collective investment schemes not exceeding CHF 100 million; or
• manages total assets of closed collective investment schemes not exceeding CHF 500 million and does not employ financial instruments with a leverage effect.

All collective investment managers who do not qualify as “asset managers” pursuant to Art. 17 f. FinIA fall into the category of “managers of collective assets” pursuant to Art. 24 f. FinIA. The degree of regulation of these managers corresponds in principle to the standard which previously applied to managers subject to the CISA and is stricter than that for “asset managers” according to Art. 17 f. FinIA (cf. “Managers of collective assets“).

With reference to the general licensing requirements pursuant to Art. 9 et seq. FinIA (cf. “What are the most important general licensing requirements of the FinIA? “) there are no differences.

The specific licensing requirements for asset managers will be lower than those for managers of collective assets (cf. “General remarks on asset managers“). Differences exist, for example, with regard to the permitted legal forms, the requirements to establish a board of directors, further internal organisation, the requirements regarding risk management and internal control and respective separations of functions, accounting regulations as well as with regards to minimum capital, collateral and own equity.

The specific licensing requirements for asset managers can be found in Art. 17 – 23 FinIA (cf. “Asset managers“). The requirements for investment fund managers deemed to be managers of collective assets can be found in Art. 24 – 31 FinIA, which are largely identical to the previous requirements under the CISA for supervised asset managers of collective investments (cf. “Managers of collective assets“). Exceptions may apply with regard to the obligation to appoint a board of directors that is largely independent of the executive board. While, to the best of our knowledge, FINMA required the asset managers of collective investments to provide for an independent board without exception in accordance with the former CISA, art. 37 para. 5 FinSA states that FINMA may waive such requirement in justified cases, “in particular if the company has ten or fewer full-time employees or an annual gross income of less than 5 million Swiss francs”. To what extent FINMA will make use of this authorisation remains to be seen.

Under the FinIA, in order to carry out their activities, managers of collective assets need a licence from FINMA, which also exercises ongoing supervision (Art. 5 para. 1 FinIA and Art. 61 para. 3 FinIA). For asset managers of collective investment schemes already authorised by FINMA, nothing has changed under the FinIA regarding the authorisation and supervision regime.

Asset managers of collective investment schemes provide financial services in accordance with the FinSA. If this is done professionally (cf. “When are asset managers professionally active?“), they must comply with the obligations stipulated in the FinSA. These include:

• carrying out a client segmentation (Art. 4 para. 1 FinSA): The clients of the managers of collective investment schemes are the investment vehicles and not the investors. Swiss collective investment schemes are generally regarded as institutional clients; foreign vehicles may declare that they wish to be regarded as such (Art. 5 para. 4 FinSA). Client segmentation will therefore not be a complex task for asset managers of collective investments. More detailed clarifications must be made in connection with the distribution of collective investment schemes (cf. “Distributors of collective investment schemes“).
• compliance with rules of conduct (Art. 7 f. FinSA) that, however, do not apply to institutional clients (Art. 20 para. 1 FinSA). Institutional clients may declare that they wish to be considered professional clients (Art. 5 para. 6 FinSA). In this case the rules of conduct will be applied with some exceptions, provided the investment vehicle does not again waive individual conduct rules (Art. 20 para. 2 FinSA). The obligation of the collective investment schemes manager to comply with the rules of conduct under the FinSA must thus be determined according to the specific circumstances;
• the correct handling of actual or potential conflicts of interest (Art. 25 f. FinSA) (cf. “How must a financial service provider deal with conflicts of interest?“).
• the obligation to issue documents (Art. 72 et seq. FinSA);
• the affiliation with an ombudsman (Art. 16 FinIA / 77 et seq. FinSA).

Art. 20-24 CISA contain various rules of conduct which had to be observed by the licensees pursuant to CISA and their representatives. These continue to apply if they are intended to protect investors who are not in direct contact with the financial institution, i.e. if there is no actual “point-of-sale” relationship.

If, however, the CISA’s rules of conduct were designed to protect the clients at the point of sale or to establish organisational requirements with the aim of protecting the clients, these are newly regulated in the FinSA. Art. 24 para. 1 and 3 CISA, according to which the licence-holders must have taken precautions to ensure reliable acquisition and objective advice to clients and, in the case of personal recommendations for the acquisition of collective investment schemes, to record the reasons for the recommendations and the client requirements, were deleted and transferred to the FinSA. Furthermore, Art. 22 CISA, which established standards in connection with the selection of counterparties and the execution of transactions (“best execution”), are repealed, as these obligations are also transferred to the FinSA. However, as long as a financial service provider does not comply with the rules of conduct pursuant to the FinSA in accordance with the transitional provisions, the rules of conduct pursuant to Art. 20 – 24 CISA and those of the SFAMA continue to apply to them (Art. 105 para. 3 FinSO).

Yes, both the FinSA and the FinIA contain various transition periods (cf. “FinSA transition periods” and “FinIA transition periods“).