SWITZERLAND Trends and Developments Contributed by: Kilian Schärli, Reto Luthiger, Andrea Trost and Diana Lafita, MLL Legal
successfully. In practice, it still remains to be seen what changes this model requires, especially given that managing a fund is certainly different from directly managing individual clients’ assets. The retailisation of services The retailisation trend, or so-called democratisation, of investments is a result of the availability of highly digitised, automated and scalable solutions – and of the elimination of more expensive intermediated solu - tions. In the mid- to long term, DLT trading venues may empower retail to directly trade listed tokenised secu - rities without the need for authorised participants intermediating trades. In Switzerland, this option would exist from a regulatory perspective, despite the fact that the sole existing DLT trading venue BX Digital has (still) not made use of this feature. Real-world assets and De-PIN Geopolitical instability and rising systemic risks, together with advances in technology, are driving a stronger move towards the tokenisation of real-world assets (RWAs) such as gold, commodities and finan - cial instruments. This trend could help investors hedge against inflation. Tokenising financial instruments – particularly through tracker certificates that mirror underlying asset values – is already being adopted by companies like Kraken and Ondo Finance. These solutions are often fully col - lateralised, meaning underlying assets are segregated and not lent out, which may reduce the need for strict licensing and the capital requirements of issuers. If such models become widespread among retail investors, they could enable individuals to manage their assets independently via apps, outside the tra - ditional banking sector, especially as crypto payments become more common. This would give retail inves - tors greater control and flexibility while lowering their exposure to counterparty, systemic and inflationary risks. Currently, these offerings are classed as struc - tured products and must be provided by regulated entities, but new models – such as those using De- PIN technology for real-time collateral auditing – could eventually replace capital requirement-based rules.
In the medium term, technology is improving trans - parency, allowing investors to manage assets more directly and take on more responsibility for risks. This may result in a shift from traditional bank deposits towards diversified holdings, including stablecoins linked to various assets. Geographic market structure and competition The merger of Credit Suisse and UBS has led to an exceptional level of concentration in Switzerland’s traditional banking sector, with UBS now controlling approximately 25%–30% of the domestic deposit and loan market. UBS’s swift adoption of AI, with about 300 new applications, has encouraged other institu - tions to speed up their tech development. Simulta - neously, UBS partners with fintech companies and invests in digital innovation through its UBS Next ini - tiative. As a result, numerous start-ups and mid-sized firms coexist alongside the major banking institutions. This reflects the hybrid approach taken by big banks towards fintech: competition and collaboration. Switzerland’s liberal approach allowing inbound cross- border banking and asset management services fos - ters greater competition within the market. Global institutions have varying degrees of involvement in the Swiss market, tailored to their strategic objectives. For example, Revolut currently operates as a licensed Swiss representative office and is actively seeking to obtain a full Swiss banking licence to be able to fully establish operations in Switzerland. Meanwhile, BBVA SA, with its established presence in Switzerland, holds a fully-fledged banking licence and has broadened its services to include investment opportunities in digital assets. A wide range of other banks also engage in pure cross-border activities, adjusting their compli - ance practices to meet Swiss financial services regu - lations – though remaining outside the scope of Swiss prudential supervision. Conversely, to offer outbound services to neighbour - ing EU countries, EU regulations generally require firms from third countries to secure a licence. This approach is less accommodating than the Swiss regime, which permits easier market access for foreign providers. As a result, larger groups typically establish a licensed entity within the EU, enabling them to passport their services across other EU member states.
824 CHAMBERS.COM
Powered by FlippingBook