SWITZERLAND Trends and Developments Contributed by: Joseph Merhai and Thomas Pasquier, Aegis
fund managers. FinSA sets out requirements for client segmentation, information duties and suitability assessments, ensuring that inves - tors receive appropriate advice and transparent information regarding investment products. Fin - IA, on the other hand, establishes the licensing requirements for financial institutions, including fund managers, and defines the organisational standards they must meet. Together, these acts create a cohesive regulatory environment that promotes investor protection and aligns Swiss regulations with international best practices. The Collective Investment Schemes Act (CISA) sets out the rules for the authorisation, organi - sation and operation of collective investment schemes. Along with its implementing ordi - nances, CISA provides a robust legal basis for the functioning of both open-ended and closed- ended funds, specifying requirements for fund managers, custodians and distributors. Under CISA, fund managers must adhere to stricter governance and risk management requirements, including provisions related to the safekeeping of assets, valuation procedures and transparency in investor communications. These regulations are intended to safeguard the interests of investors and ensure that fund oper - ations are conducted in a prudent and profes - sional manner, and have been further developed by case law and clarification from FINMA. The scope of CISA and its dynamic relationship with FinSA and FinIA have also been clarified during the last couple of years, providing more clarity for the market as a whole and the asset management community. In addition, the introduction in 2023 of the Limited Qualified Investor Fund (L-QIF) repre - sented a significant development in the Swiss
fund industry. L-QIFs are designed to provide a more flexible, cost-effective vehicle for qualified investors, enabling swift and efficient fund set- up without prior FINMA approval. This move not only demonstrates Switzerland’s commitment to enhancing its competitiveness in the global fund market but also highlights its responsiveness to the needs of sophisticated investors who seek greater agility and reduced regulatory burdens. The L-QIF was expected to attract more private and institutional investors, and thus strength - en the position of Switzerland as a favourable domicile for alternative investment funds, but its adoption has been slow. It seems that the costs and oversight by a regulated bank, asset management company or fund administrator are deemed burdensome, and some modifications would be welcome. Another notable regulatory trend is the increas - ing focus on sustainable finance. Switzerland has committed to creating a supportive regula - tory environment for sustainable investments, in line with global efforts to combat climate change and promote responsible investing. In this con - text, FINMA has introduced guidelines on the transparency and disclosure of sustainability- related risks for financial institutions, including investment funds. This regulatory emphasis on sustainability is encouraging fund managers to integrate ESG criteria into their investment strategies, thereby aligning with investor demand for more respon - sible and impact-focused investment prod - ucts. The trend towards sustainable finance is not only reshaping the types of funds available in the market but is also influencing reporting standards and the expectations placed on asset managers.
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