If you trade securities for clients in Switzerland, or trade professionally for your own account on a scale that matters to the market, you need a licence from FINMA as a securities firm. Trading your own money, on its own, does not. Until 2020 the same business was called a securities dealer; since the Financial Institutions Act came into force, it is a securities firm, and FINMA supervises it directly, as it does a bank.
This guide explains who needs the licence, what FINMA expects, and how it differs from a bank and a portfolio manager. It is part of our guide to doing financial business in Switzerland.
Who needs it: the five types of securities firm
| Type | What it does |
|---|---|
| Client dealer | Trades in securities in its own name for the account of clients: the classic broker. |
| Own-account dealer | Trades for its own account on a short-term basis, mainly on the financial market, either on a scale that could affect the market or as a direct member of a trading venue. |
| Market maker | Trades for its own account short term while continuously quoting firm bid and offer prices to the public. |
| Issuing house | Underwrites securities issued by third parties and offers them to the public on the primary market. |
| Derivatives firm | Creates derivatives and offers them to the public on the primary market. |
The test is the activity, not the name of the company. If you only give investment advice, you are not a securities firm, although you may have to register as a client adviser. If you manage client portfolios on a discretionary mandate without trading in your own name, you need the portfolio manager licence instead.
Not every trader needs a licence
The licence is for professional securities trading, and the Financial Institutions Ordinance sets precise thresholds:
- Trading for your own account needs a licence only if it is short term, mainly on the financial market, and either your total trading volume exceeds CHF 5 billion per calendar year in Switzerland, or you are admitted as a direct participant of a trading venue, such as the stock exchange. A company, a family office or an investor trading its own money through a bank or a broker, below that volume, needs no securities firm licence.
- Market making counts only when your prices are part of an offer to the public. Quotes given only to banks, securities firms and other supervised institutions are not public.
- Trading for clients is caught when you keep accounts or hold securities for more than 20 clients. Banks, securities firms and other supervised institutions, your qualified shareholders and the persons close to them, and institutional investors with a professional treasury do not count as clients for this test.
Below these thresholds, other rules may still apply: anti-money laundering rules, the client adviser register, or the portfolio manager licence. The point is to check before you trade, not after.
Account-holding or not
FINMA distinguishes between securities firms that hold accounts for their clients and those that do not. The difference matters to clients: only balances held with a securities firm licensed as account-holding are covered by Swiss depositor protection. With a non-account-holding firm, the client’s cash sits with a bank, and the protection is the bank’s.
Choose the model at the start. It shapes the organisation, the capital and the questions FINMA will ask.
The main requirements
- Capital: a fully paid-up minimum capital of at least CHF 1.5 million.
- Management in Switzerland: the firm must actually be run from Switzerland, not just registered here.
- Fit and proper people: the board and executive management must guarantee irreproachable business conduct; FINMA looks at reputation, experience and the qualified shareholders behind the firm.
- Organisation: a person resident in Switzerland who can represent the firm and sits in its management or board, at least two people in executive management, and, for client dealers and market makers, a separate board for strategy, supervision and control.
- Separation of functions: trading, asset management and settlement must be effectively separated.
- Internal audit independent of executive management.
- Capital adequacy, risk diversification and liquidity at all times, backed by a risk management system covering market, credit, default, settlement, operational, legal and reputational risks.
- Audit: a recognised audit firm for the licensing process and a recognised regulatory audit firm for ongoing supervision.
Foreign owners. If the firm is foreign-controlled, the countries of its qualified shareholders must grant reciprocity, and if it belongs to a financial group, the group must be subject to adequate consolidated supervision.
How the application works
- Present the project to FINMA first. FINMA expects a first presentation before the formal application.
- File the application through FINMA’s online platform, with the business plan, organisation, regulations, people, ownership chain and financial projections.
- Answer FINMA’s questions. FINMA grants the licence only when there is no doubt that every requirement is met.
FINMA gives no fixed timeline: the duration depends on the quality and complexity of the file and, for foreign applicants, on how quickly foreign supervisors respond. Plan in months, not weeks.
Securities firm, bank or portfolio manager?
| Licence | Main activity | Supervision |
|---|---|---|
| Portfolio manager | Manages client assets on a discretionary mandate | Supervisory organisation, under FINMA |
| Securities firm | Trades securities for clients or for its own account | FINMA directly |
| Bank | Takes deposits from the public and lends | FINMA directly |
Many founders ask for a bank when a securities firm, or even a portfolio manager licence, would cover what they actually want to do. See The Swiss Banking Licence and our complete map of Swiss financial licences.
And for crypto?
A crypto business that trades tokens qualifying as securities for its clients can fall under the securities firm regime, whatever its website says. The activity decides. See our Swiss crypto licence guide.
Apply or buy?
Existing Swiss securities firms change hands from time to time. Buying one does not avoid FINMA: the regulator must approve the new owner, as we explain in Buying a Bank or an EMI: How the Regulator’s Approval Really Works. But it can save the time of building the organisation from nothing.
Ask us whether you need a securities firm licence, or write to insight@fintechlex.com.
This article is for general information only and does not constitute legal advice.
