SWITZERLAND Law and Practice Contributed by: Olivier Favre and Tarek Houdrouge, Schellenberg Wittmer Ltd
5. Enforcement Trends 5.1 Regulator Priorities and Enforcement Trends FINMA has not published guidance on its priorities with respect to enforcement activities regarding deriv - atives. Given that the first level of enforcement activi - ties lies with the auditors, any audit points tend to be addressed at that level. For the future, increased scrutiny may be expected for any derivatives transactions entered into with retail clients, in particular, regarding compliance with any requirements to provide adequate disclosures under the point-of-sale information obligations of the FinSA (eg, for CFDs or similar retail products).
Industry Association (FIA) standards that are provided to the clients of the cleared derivatives. 4.3 Opinions and Other Documentation Issues The Swiss regulatory capital requirements require net - ting and collateral enforceability opinions for the pur - poses of allowing Swiss banks to account for deriva - tives transactions on a net basis for regulatory capital purposes (see 2.4 Listed v Over-the-Counter ). Such opinions must cover the enforceability of the netting arrangement and the enforceability of the collateral in the insolvency of the counterparty and under the governing law of the agreement, as well as under the governing law of the transactions. The Swiss margin rules require opinion coverage for the enforceability of the collateral provided by the counterparty (the “collateral provider opinion”) and, as regards initial margin, for the availability of the col - lateral to the collateral provider in the insolvency of the collateral taker (the “collateral taker opinion”). With respect to ETDs, the Swiss regulatory capital requirements also require a legal opinion regarding the positions and margin assets held through the clear - ing chain with the CCP for the purposes of applying a risk weight of 2% for own account positions (see 2.4 Listed v Over-the-Counter ).
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