Update Legal & Regulations
The industry agrees: The new statutory instruments “FIDLEG” and “FINIG” in the form put forward by the Council of States represent a sound basis for modern financial legislation with investor protection that take account of practical requirements. The proposal is currently being discussed by the Com-mittee for Economic Affairs and Taxation of the National Council (Kommission für Wirtschaft und Abgabe des Nationalrats – “WAK-N”). While it is broadly in favour of the proposals, it would like to see certain changes, such as a loosening of the obligation to issue a prospectus for offers made to a limited number of investors. Further potential for improvement still remains in certain areas, and the SSPA will continue to make specific proposals in this regard. The National Council is expected to de-cide on the proposed legislation during the 2017 autumn session. The final discussion of outstanding issues is planned for the 2017 winter session of 2018 spring session. The FIDLEG and FINIG are now expected to come into force on 1 January 2019 at the earliest.
In order to be properly prepared for the changes, project work on the execution provisions have al-ready begun. Together with further industry associations, the SSPA is actively involved in this work, in particular in the field of the new prospectus rules and new basic information sheet. The Association is firmly convinced that, not least thanks to the close involvement of the sector, sensible and practi-cal operating conditions can be created for the Swiss market, without importing regulatory mistakes from abroad.
PRIIPs & MIFID2
The EU PRIIPs Regulation – along with the introduction of standardised key information documents for products (so-called “KID”) for “packaged products” – and the MIFID2/MIFIR regulatory package are set to come into force in January 2018. For the sector, the implementation of this regulation rep-resents a major challenge. In the interim, the relevant technical execution provisions have been pre-sented – but the devil is in the detail, and this means many outstanding questions remain. A number of industry working groups are currently discussing the PRIIPs Regulation and MIFID2. This involves, inter alia, topics such as the question of the issuer, the competent supervisory authority and the lan-guage used in the PRIIPs KIDs or the role of the manufacturer, distributor or co-manufacturer as well as the target market concept under MIFID2.
In Switzerland, withholding tax will be imposed pursuant to Section 871(m) via the “issuer solution”, meaning that the issuers of structured products will normally withdraw US withholding tax at a rate of 30%. A “custodian solution” is not practicable for structured products that are mass-distributed, because an allocation of the relevant “dividend equivalent payments” to the individual investors and corresponding reporting would not be possible for the banks without an onerous workload. SIX is currently examining how it can support the sector with reporting. The SSPA is staying on the ball, and will be providing further information within the context of the SSPA Forum 871(m).