SWITZERLAND Law and Practice Contributed by: Olivier Favre and Tarek Houdrouge, Schellenberg Wittmer Ltd
collective investment schemes and pension funds. All other counterparties are deemed to be non-financial counterparties. Similar to EMIR, small non-financial counterparties are distinguished from large non-financial counterparties by reference to the nominal amounts of the outstand - ing OTC derivatives (average gross positions, calcu - lated over 30 working days). A non-financial counter - party is deemed to be large if it exceeds at least one of the following threshold values with all of its trading activity with any counterparties: • credit derivatives – CHF1.1 billion; • equity derivatives – CHF1.1 billion; • interest rate derivatives – CHF3.3 billion; • FX derivatives – CHF3.3 billion; and • commodity derivatives and other derivatives – CHF3.3 billion. The calculation is done by aggregating the positions of all group companies that are non-financial counter - parties (worldwide), without counting the positions of financial counterparties (of the same group). Hedging transactions and physically settled FX forwards and swaps are not counted for the calculation. The Swiss calculation includes cleared and uncleared OTC derivatives transactions and, in this respect, will differ from the determination as it is made under EMIR when the rules of EMIR 3.0 come into force, as for the purposes of EMIR 3.0, only uncleared OTC derivatives will be counted (but with lower thresholds). The FinMIA distinguishes small and large financial counterparties by reference to a threshold of CHF8 billion, including the entire derivatives portfolio (count - ing also hedging transactions and including cleared and uncleared OTC derivatives transaction, but with - out counting ETDs) except for physically settled FX forwards and swaps. Except for funds, collective investment schemes and fund managers, the calcula - tion is made by aggregating the positions of all group companies that are financial counterparties (world - wide), without counting the positions of non-financial counterparties (of the same group). As regards funds, collective investment schemes and fund/asset man - agers, there is no aggregation of their positions. The
calculation is made in respect of each fund and collec - tive investment scheme separately (even if the assets are managed by the same manager). As opposed to the rules of EMIR 3.0 as they are intend - ed to be implemented, the FinMIA does not require a separate calculation for cleared and uncleared OTC derivatives. Under the current framework of the FinMIA, the determination of a party qualifying as a small or large financial or non-financial counterparty is an ongoing calculation. To the extent that a small financial or non- financial counterparty becomes a large one, it must notify the counterparty and it has four months to comply with the further obligations resulting from the change to its status (eg, compliance with the clearing obligation). To the extent that the transactions are entered into on a cross-border basis, these regulatory requirements may also be complied with by applying the rules of a jurisdiction recognised by the Swiss Financial Market Supervisory Authority (“FINMA”) as being equivalent to the rules of the FinMIA by applying such foreign rules on a substituted compliance basis. This is at pre - sent possible for EMIR, UK EMIR and the US rules of the Commodity Futures Trading Commission (CFTC). ETDs ETDs are also subject to some regulatory obligations under the FinMIA, including a reporting obligation for all such derivatives transactions. However, the other regulatory obligations of the FinMIA do not apply to ETDs. Structured products Structured products are not subject to the regulatory obligations of the FinMIA. However, if they are issued to any retail investors, they must either be issued or guaranteed by a regulated firm or, as an alternative, they must be fully collateralised. In addition, they must be issued under a programme or prospectus that complies with the disclosure requirements of the Swiss Financial Services Act of 15 June 2018 (“FinSA”) and any products that are offered to retail investors other than in the context of a discretionary asset management mandate or an advisory mandate
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