SWITZERLAND Trends and Developments Contributed by: Ansgar Schott and Matthias Courvoisier, Baker McKenzie Switzerland
changes is the introduction of a uniform regulation for cross-border transactions in the new Article 95a of the FinMIA. This regulation clearly defines which obligations apply to transactions with foreign counter - parties if these counterparties would be subject to the obligations if domiciled in Switzerland. This new regu - lation replaces several previous provisions, including Articles 102 and 114 of the FinMIA, as well as parts of Article 106, paragraph 1 of the FinMIO (which all deal with cross-border transactions). The consolidation improves the clarity of the regulations and reduces the administrative burden for market participants. Another important change is the simplification of the application of foreign law. In the future, market par - ticipants can assume that the foreign law recognised by FINMA, as the equivalent, can be used not only for fulfilling obligations but also for categorising counter - parties (new Article 95, paragraph 2 of the FinMIA). This means that market participants no longer have to categorise their foreign counterparties separate - ly under Swiss law, which significantly reduces the administrative burden and increases legal certainty. These changes will help to facilitate cross-border derivatives trading and strengthen the competitive - ness of the Swiss financial centre in the internation - al environment. Particularly for smaller companies engaged in cross-border activities, these simplifica - tions mean a significant reduction in costs and admin - istrative burden. Valuation obligations and risk mitigation Current issues The valuation obligation for outstanding derivatives transactions is a key instrument for risk mitigation in derivatives trading. It is intended to ensure that mar - ket participants are informed at all times about the current value of their outstanding positions and can react accordingly to market changes. This valuation is particularly important for large counterparties, as they typically have extensive derivative positions that can carry significant risks. However, under the existing FinMIA, the valuation obligation is not clearly regulated, particularly as far as transactions between large and small counterparties
are concerned. This leads to uncertainties in practice and makes it difficult to apply the valuation regulations. Adjustments As part of the revision of the FinMIA, the valuation obli - gation has been clarified and adapted to practice. New Article 109, paragraph 2 of the FinMIA now clearly pro - vides that the valuation obligation also applies to large counterparties in transactions with small counterparties. Such clarification ensures that an adequate valuation of outstanding positions is carried out even in transac - tions with smaller counterparties. Further, it ensures that the valuation obligation is consistently applied and that all relevant risks in derivatives trading can be adequately monitored, which also increases the stability of the financial system and improves market transparency. FinMIA Refit’s importance to the Swiss financial centre The revision of the FinMIA and the associated chang - es to derivatives trading are an important step towards strengthening the stability and competitiveness of the Swiss financial centre. Harmonisation with interna - tional standards and the simplification of regulations will improve transparency and risk assessment in the derivatives market. Small non-financial counterparties will particularly benefit from the simplifications and significantly reduce their administrative burden. The introduction of a uniform regulation for cross-bor - der transactions and the harmonisation of reporting obligations will also strengthen the competitiveness of Swiss companies in the international environment. Overall, the FinMIA Refit will help strengthen confi - dence in the Swiss financial market and further con - solidate its position as a stable and attractive finan - cial centre. The clarification of valuation obligations and the facilitation of foreign supervisory authorities’ access to Swiss trade repositories are additional measures that contribute to improving market stabil - ity and transparency. In summary, the FinMIA Refit is a necessary step towards making the Swiss finan - cial market fit for the future and securing its role in the global financial system. As mentioned above, it is expected to enter into force in 2027 at the earliest.
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