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SWITZERLAND New regulations for Swiss Financial Institutions FinIA and FFSA Background The process of establishment of binding stand- ards for the international financial markets is advancing quickly. Although not part of the harmonised EU market, Switzerland has decided to align its own rules and regulations with EU standards in this area. Therefore, also the key elements of a new EU initiative, the MIFID II, are to be transposed into Swiss law. Unlike the Undertakings for Collective Investment in Transferable Securities Directive, which was incorporated into the Swiss Collec- tive Investment Schemes Act, MIFID II is to be transposed into a totally new law, the Federal Financial Services Act (FFSA). Additionally, a new Financial Institutions Act (FinIA) shall govern the licensing requirements and other organisational points for financial institutions. What’s in there? Both acts, FFSA and FinIA, intend to strengthen the protection of investors on one side and to im- prove the competitiveness of the Swiss financial centre on the other side. The purpose of FinIA is to regulate the supervision of all financial ser- vices providers that conduct any kind of asset management activities. In its article 5 a hierarchy of specific licensing statuses has been introduced, whereby a licence with more extensive requirements automatically constitutes permission to perform also activities of lower level licences. However, an exemption from the licensing ob- ligation within the scope of the authorisation cascade does not lead to a dispensation from fulfilling requirements associated with the ad- ditionally performed activities; those still have to be controlled during the annual supervisory audit. Subject to the new licencing obligation for asset managers are all those who - based on a con- tract – professionally manage assets on behalf of and for the account of their clients. Therefore, managers of individual client assets as well as those who manage the assets of Swiss occu- pational benefits schemes will also require a li- cence in the future. Worth mentioning in the draft

of FinIA is moreover the introduction of “white money strategy” in article 11, which clearly obli- gates the financial institution to verify the risk of tax evasion respective tax fraud for the monies brought by the client. The other new act, the FFSA, has a few signifi- cant aspects. First of all, it is supposed to govern the relationship between financial intermedi- aries and their clients for all kinds of financial products. Among others, it provides a more pre- cise definition of the terms “financial services provider”, which shall mean all persons who “professionally render financial services to cli- ents in Switzerland” and list the activities, which fall into the term “financial service”. Further- more, it clearly states, that, when giving advice, financial service providers are obliged to take into account the necessary information on the financial situation, knowledge and experience of the client and provide him with a basic informa- tion sheet. It aims also at introduction of uniform prospectus requirements for all securities that are publicly offered or traded on a trading plat- form, although, where it makes sense, these are geared to EU regulations. Finally, it foresees improvements in terms of pri- vate actions, which can be taken in the event of misconduct by financial service providers - such as an introduction of a specific, financial services ombudsman proceeding in addition to the ordinary arbitration process as provided in civil law. What’s next? The Federal Council launched the consultation on FFSA and FINIA on 25 June 2014. This will last until 17 October 2014.

BELGIUM Communication of the FSMA dated 1 September 2014 on the reporting obligations of Alternative Investments Funds’ Managers Background This communication follows the publication of the law dated 19 April 2014 on Alternative Investment Funds and their Managers. What’s in there? This communication is deemed to inform Alterna- tive Investments Funds’ Managers on the content and the format of reports to be delivered to the FSMA (the Belgian Financial Services and Markets Authority) in accordance with the law dated April 19th, 2014 on Alternative Investment Funds and their Managers.

THE COMMUNICATION IS AVAILABLE HERE

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