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Information on the Financial Institutions Act (FinIA)

What has changed for Portfolio Managers and Trustees?
Legal Counsel, LL.M
February 18, 2020 | Knowledgebase

What has changed for Portfolio Managers and Trustees?

Starting from January 1, 2020, regulations of the Federal Council of November 6, 2019, entered into force. We are talking about the standing orders on the implementation of FinSA (Law on Financial Services) and FinIA (Law on Financial Institutions), adopted by Parliament on June 15, 2018. Together with it, they approved the resolutions :

- on Financial Services Ordinance (FinSO);
- on Financial Institutions Ordinance (FinIO);
- on Supervisory Organisations Ordinance (SOO).

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Who are a portfolio manager and collective asset manager?
Management of individual portfolios is carried out by portfolio managers. These are persons who have received the authority from clients to act on their behalf and execute orders as part of the disposal of assets on a commercial basis or in any other way (Article 17 FinIA).

Portfolio managers are also persons who are entrusted with the management of collective investment schemes or professional pension schemes below the established threshold values (Clause 2, Article 24 of FinIA).
Who is the Trustee?
A trustee is a person who is entrusted to manage or dispose on a commercial basis separate fund. It acts in the interests of the beneficiary or accordance with the stated objectives, based on a limited grant. The grant is provided according to the document creating the trust (within the meaning established by the Hague Convention of July 1, 1985, according to the law applicable to trusts and their recognition). The trustee is entrusted with the management of a separate fund, ensuring the maintenance of its value, as well as limited use.

Portfolio managers and proxies are required to authorise at FINMA.

Mandatory authorization in FINMA for managers and trustees

The requirements for obtaining permission to engage in this activity have now extended to managers and trustees. They are required to apply to FINMA for six months upon the entry into force of FinIA. They need to achieve compliance with the requirements specified in the legislation within three years from the date of its entry into force. Managers and trustees apply for permission. Professional activity is allowed to continue until a decision is made on the authorization. In this case, the condition that they are associated with SROs (the procedure is defined in Article 24 of the Federal Law on Combating Money Laundering and the Financing of Terrorism (AMLA), which implies that they are controlled by this SRO regarding compliance with established requirements, must be met.

Managers and trustees who have started their activities after FinIA has entered into force are obligated to:

  • report immediately to FINMA;
  • comply with the terms and conditions to obtain permission from the date of commencement of the activity, regardless of the fulfillment of the requirement of joining SO.
Not later than one year after FINMA approves SO, managers and trustees should join SO and apply for authorization. It is possible to continue activities until a decision is made on permission. A condition is a communication with the SRO (as defined in Article 24 of the AMLA) and supervision by the SRO regarding compliance with established requirements.
Are there any exceptions for "grandfathers"
When discussing regulatory acts, the proposal was rejected not to require authorization from portfolio managers operating for many years. Such discounts to such "grandfathers" are not supposed.

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Portfolio managers and trustees, who are now required to authorize, are given six months after FinIA takes effect to notify FINMA. A special registration form is provided for notification. It is available on the EHP platform for surveys and applications.



Source: https://www.finma.ch/en/authorisation/fidleg-und-f...

Legal disclaimer.
This article does not constitute legal advice and does not establish an attorney-client relationship. The article should be used for informational purposes only.
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