Switzerland is a globally recognised financial hub, offering a robust regulatory framework for securities business. Under the Financial Institutions Act, the former “securities dealer” is now called a securities firm. This guide covers the legal conditions, the process, the cheaper alternative for portfolio managers, and how the Swiss licence compares with an EU MiFID II licence.
For assistance with the licensing process, contact us at insight@fintechlex.com.
Who needs it
Broadly, a business that, on a commercial basis:
- trades securities in its own name for the account of clients;
- trades securities short-term on its own account, on a significant scale;
- acts as market maker; or
- underwrites or issues securities and offers them publicly on the primary market.
A securities firm that keeps client accounts can also hold client money, which is one of the reasons it is regulated almost like a bank, and supervised directly by FINMA.
Advantages of a Swiss licence
- Prestige and credibility with high-value clients and institutional investors.
- Access to global markets through Switzerland’s cross-border network.
- Regulatory stability and long-term certainty.
- Client confidence through FINMA supervision.
Legal conditions
- Capital: minimum fully paid-up capital of CHF 1.5 million.
- Business plan showing capital adequacy and risk diversification.
- Management in Switzerland, with separation of trading, asset management and settlement.
- Impeccable reputation of managers and qualified shareholders.
- Internal controls, including an independent internal audit.
- Risk management for market, credit, operational and legal risks.
- A recognised audit firm for the licensing process and ongoing audits.
The licensing process
Present the project to FINMA first, then file through FINMA’s platform with the business plan, organisation and internal control policies. FINMA stays in dialogue with the applicant throughout. The timeline depends on the complexity of the file.
The alternative: trade through a licensed partner
A FINMA-licensed portfolio manager does not need a securities firm licence to offer trading to its clients. It can decide the investments and have a licensed securities firm or bank execute the trades. The portfolio manager starts with CHF 100,000 of capital instead of CHF 1.5 million, avoids the compliance infrastructure of a securities firm, and can upgrade later when volumes justify it.
Conditions: clear agreements between client, manager and executing institution; transparency to clients on third-party execution and costs; and full AML compliance.
Switzerland or the EU?
| Point | Switzerland | EU (MiFID II) |
|---|---|---|
| Supervisor | FINMA, under FinIA | National authority of the home member state |
| Minimum capital | CHF 1.5 million | From EUR 75,000 to EUR 750,000, depending on activities |
| Market access | Global, but no EU passport | Passport to all EU/EEA states |
| Best for | Prestige, international private clients | EU retail and institutional clients |
What nobody tells you
Many brokers, crypto platforms and trading start-ups discover they need this licence after they have started. The test is what you do with client orders and client money, not what you call yourself. If your model involves executing trades for clients in your own name, ask the question before you launch, not after your first large client.
Conclusion
A Swiss securities firm licence establishes your business in one of the world’s most respected financial markets. If you need the EU market, compare it with a MiFID II licence; if you are a portfolio manager, start with the partner model. Contact us at insight@fintechlex.com.
This article is for general information only and does not constitute legal advice.
