Update Legal & Regulations
On 3 November 2016, the Swiss Council of Estates Committee for Economic Affairs and Taxes [Wirtschaft und Abgaben Kommission – “WAK”] completed its consultations on the Swiss Financial Services Act [“FIDLEG”] and the Swiss Financial Institution Act [“FINIG”] and published the white paper with the proposed amendments. Fortunately, a large proportion of the amendments that the industry wanted to see were adopted. The Swiss Council of States will discuss the proposed legislation during the winter session, and is likely to approve the proposed amendments. It is our assumption that the National Council’s WAK will discuss the proposed legislation during the first quarter of 2017. Parallel to this, work will begin on the associated FIDLEG/FINIG ordinances.
On 9 November 2016, the EU Commission proposed delaying the introduction of PRIIPs by 12 months, to the new date of 1 January 2018. While the deferral has yet to be approved by the EU Parliament and European Council, this is likely to be just a formality, as both the Parliament as well as the large majority of member states spoke out in favour of a delay. The Association is continuing its work in relation to PRIIPs in the various working groups.
Hearing on the draft FINMA Circulars in the field of securities trading
On 9 November 2016, within the imposed deadline, the Association issued its response to the draft FINMA Circulars “Securities Journal” [“Effektenjournal“], “Securities Transaction Reporting Obligation” [“Meldepflicht Effektengeschäfte”] and “Organised Trading Systems” [“Organisierte Handelssysteme”]. In this conjunction, the industry called in particular for greater detail about the reporting obligations and the applicability of the rules governing organised trading systems to the field of structured products.
A US regulation that has become known under the pseudonym 871(m) is set to come into force on 1 January 2017. This will introduce a withholding tax on so-called “dividend equivalent payments”. The tax relates to dividend-linked revenues that non-US investors generate by investing in certain financial instruments relating to US equities (certain qualified indices are excluded). Certain structured products will also be subject to the new US tax, irrespective of where the issuer is domiciled, where the structured products are sold, and what laws these are governed by. It is still unclear whether the enactment of parts of these regulations will be delayed by 12 months, or for which financial instruments (most probably only Delta 1 products) the rules will be applicable from 1 January 2017. In recent months, the SSPA has been assessing the new regulatory requirements in detail, and has been discussing possible industry solutions with its members. A memorandum is currently being drawn up, showing the legal situation and possible solutions regarding 871(m).