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According to Daniel Haefele, chief executive of Zurich-based independent fund distribution provider Acolin Fund Services, the new legislation is set to have a major impact on both traditional and alternative fund managers.
“Alternative asset managers seeking light-touch regulation will choose other domiciles in the future”, he says. “Switzerland will become one of the most stringently-regulated financial centres in the world. The new regime is a clear commitment to the premium quality for which Swiss products are known globally. Under CISA there will be no difference between regulation here and that in European markets like the UK.”
He believes the impact on fund distribution could be substantial. Under the draft legislation, all foreign funds distributed in Switzerland, whether to the public or professional investors, will have to appoint a representative. It’s still not clear how the new measures will be applied by the Swiss Financial Markets Authority, the industry regulator. “Parliament is expected to pass the act only in June, after which the government and FINMA will publish the Collective Investment Schemes Ordinance”, Haefele says.
Under the new law, FINMA will require firms to demonstrate “appropriate organisation and adequate capital”. Many independent Swiss asset managers have six employees or fewer, and may have problems meeting the new rules.