Switzerland is globally recognized for its robust financial services sector, supported by a comprehensive regulatory framework that accommodates a wide range of traditional financial activities. Excluding licenses for banking, insurance, and digital blockchain technologies, Switzerland offers a variety of licenses tailored to traditional financial services such as asset management, securities dealing, trust management, and collective investment scheme administration.
Our Swiss team includes experienced lawyers, bankers, and bank auditors who provide expert business planning and licensing support. For more information about our Swiss financial licensing services, contact us at [email protected].
The Waterfall Principle
A unique feature of the Swiss licensing system is the waterfall principle, which simplifies regulatory requirements. Under this system, a higher-tier license inherently includes permissions for all lower-tier activities. For example, a firm holding a top-level license can provide a broad range of financial services without needing additional licenses for those lower-tier activities. This structure enhances operational efficiency and reduces administrative complexity for financial service providers.
Swiss Traditional Financial Services Licenses
Swiss SRO Regime
The Swiss Self-Regulatory Organization (SRO) regime covers a range of financial services, including:
- Asset management for portfolios up to CHF 5 million (higher amounts require a portfolio license).
- Financial advisory and client introductory services to banks.
- Payment transactions, credit transactions, and exchange services.
- Trading in gold, precious metals, and commodities.
- Custody or management of securities.
The SRO regime also includes limited crypto-related services, such as trading, exchange, and wallet services, as well as staking-backed loans and advisory services.
Swiss Portfolio License
This license enables firms to:
- Offer discretionary management of client portfolios.
- Provide investment advice, asset allocation, and risk management.
- Manage funds under the de minimis rule, allowing operations below specific thresholds:
- Leveraged assets under CHF 100 million.
- Unleveraged funds with no redemption rights for five years and assets under CHF 500 million.
The portfolio license is ideal for asset managers looking to provide comprehensive services within a flexible regulatory framework.
Swiss Trust License
The Swiss trust license allows entities to professionally manage trusts and related services. Key responsibilities include:
- Trust Management: Administering trust assets per the trust deed while acting in the beneficiaries’ best interests.
- Fiduciary Duties: Managing trust assets with a high standard of care and ethical conduct.
- Conflict of Interest Management: Ensuring decisions for one trust do not negatively affect another.
- Investment Management: Making financial decisions for trust portfolios as allowed under specific trust terms.
This license permits trustees to manage multiple trusts, each with unique terms and beneficiaries, while ensuring compliance and fairness.
Swiss CISA Fund License
The Collective Investment Schemes Act (CISA) fund license covers the management, distribution, and administration of collective investment schemes. It includes:
- Limited Qualified Investor Funds (L-QIFs):
- These funds do not require FINMA authorization, offering increased flexibility, faster time-to-market, and lower costs.
- Access is limited to qualified investors, which includes a wide range of individuals and entities in Switzerland.
- Retail investors can opt to become qualified investors by signing a declaration.
- Tax Efficiency: Switzerland’s favorable tax regime makes L-QIFs an attractive option for fund structuring.
Swiss Security Dealer License
This license allows firms to engage in securities trading, brokerage, and related activities, including:
- Trading: Buying and selling securities such as stocks, bonds, and derivatives for clients or their own accounts.
- Brokerage Services: Facilitating transactions between buyers and sellers for a commission.
- Investment Advice: Providing tailored recommendations for clients’ portfolios.
- Asset Management: Managing portfolios aligned with clients’ objectives.
- Underwriting Services: Guaranteeing the sale of new securities issues.
- Market Making: Offering liquidity by consistently quoting prices for specific securities.
- Financial Research and Analysis: Conducting market research to support investment decisions.
- Custody and Administration: Holding securities on behalf of clients and managing related administrative tasks.
Conclusion
Switzerland’s licensing framework for traditional financial services is designed to foster innovation and efficiency while maintaining a high standard of regulatory oversight. From the flexibility of the SRO regime to the robust offerings of the portfolio, trust, fund, and security dealer licenses, these licenses provide tailored solutions for a wide range of financial activities.
Our goal is to help you build a profitable, sustainable business equipped to navigate the complexities of the financial industry. For more information about Swiss financial licensing services, contact us at [email protected].
