Update Legal & Regulations
Following the Council of States in December 2016, the National Council has now also approved the two draft laws FIDLEG and FINIG. On 13 September the National Council conducted an exhaustive debate on FIDLEG/FINIG, and approved the two laws. The two laws were rejected in the overall vote, in particular by the Greens and the SP.
The SSPA contributed actively to WAK-N with specific proposals submitted by various members, and together with further industry associations supports the approach taken by FIDLEG and FINIG in the WAK-N version. WAK-N establishes a good compromise for sustainable and acceptable investor protection.
There are a number of key differences between the National Council and the Council of States, which now need to be settled. The proposal is now being returned to the Council of States, to enable differences to be ironed out. The Council of States will examine the proposal during the 2017 winter session. The final vote on FIDLEG/FINIG is scheduled to take place during the 2018 spring session. It is expected to come into force on 1 January 2019 at the earliest.
The SSPA will continue to contribute actively towards the legislative process, not merely within the context of settling outstanding differences, but also in respect of drawing up the execution ordinance FIDLEV. The Association has paid particular attention to the key information document. Requirements pertaining to the content, scope, structure and language of the key information document are set out in FIDLEV, and it is crucial that we agree on a solution here that is appropriate for Switzerland. Integral adoption of the PRIIPs regulation cannot be the solution for Switzerland, not least because use of the PRIIP KIDs as an equivalent non-domestic document is anyway established in the FIDLEG.
PRIIPs & MiFID II
The EU PRIIPs Ordinance – and with it the introduction of uniform key information sheets for products (so-called “KID”) – and the Financial Market Directive MiFID II – and with it the introduction of product governance and in particular a target market concept, along with cost and inducement transparency – are set to come into force in a few months. SSPA members are working hard to prepare for these changes. There are still a large number of detailed questions and a need to coordinate the technical implementation of certain regulatory provisions. The Association supports its members by discussing these topics within the framework of working groups, and by searching for pragmatic solutions. A topical issue addressed by the Association is the target market provision. A solution is being developed with the involvement of SIX Connexor and SIX FI in the “Standards” working group. This will enable issuers to define a specific target market for each product with sufficient detail, and to make this information available to financial services providers.
EU benchmark regulation
In addition to the PRIIPs regulation and MiFID II, with effect from 1 January 2018 the “EU Benchmark Regulation” (abbreviation: BMR) will also have to be fully implemented.
The BMR relates to indices that are used by financial instruments as reference parameters. Investors are to be better protected by making the capital market more transparent and stable, thereby boosting investor confidence in the capital market.
Primarily affected are administrators domiciled within the European Union which provide or prepare the benchmarks. The Benchmark Regulation will, however, have an impact beyond the European Union. If an index or benchmark is calculated in a third-party state, i.e. for example in Switzerland, then both the benchmark as well as the administrator will need to be entered in a special register, in order to actually enable the benchmark to be used in the EU for financial products. The ESMA may decide that the legal framework and supervisory practice in a third-party state is sufficient, and that it is consequently not necessary to check every index and provider separately. While this regulation is not as central as MiFID II, Swiss issuers nevertheless need to be aware of this topic.