Offering of foreign funds in Switzerland 2020 and beyond: overview of the new Swiss regulations

By Patrick Pilastro, Representative Services Switzerland, Vice President, ACOLIN

The Financial Services Act (“FinSA”) and the Financial Institutions Act (“FinIA”), together with the implementing ordinances (FinSO / FinIO), entered into force on 1st January 2020[1]. They became part of the new financial market architecture in Switzerland. Simultaneously, the existing Collective Investment Schemes Act (“CISA”) and its implementing ordinance CISO have been revised and entered into force as well on the 1st January 2020.

The purpose of these new Swiss financial market regulations is to create uniform competitive conditions for financial institutions and instruments (i.e. a level playing field), to improve client protection, and, most of all, to align the Swiss regulations with the EU regulations (notably MiFID II).

Generally speaking, the FinSA contains rules pertaining to the offering of financial services (activity), the FinIA sets the authorisation conditions and organisational requirements for financial institutions (institutions) subject to a prudential supervision, and the amended CISA contains rules for Swiss and foreign funds (products) offered in Switzerland.

The following overview focuses on foreign funds and the providers (Swiss or foreign) who aim to offer foreign funds in Switzerland under the new regulation[2].

It is important to understand that the fund (the product itself) needs to fulfil all requirements according to the CISA before it can be offered to investors in Switzerland. In addition, anyone who aims to offer investment funds in Switzerland needs to comply with all the requirements set out in FinSA before starting any activity in this regard.

1. Requirements for foreign funds to be offered in Switzerland (product side)

Depending on the type of investor targeted, the offering[3] and advertising[4] of foreign funds in Switzerland may trigger product-related requirements such as the appointment of a Swiss representative and a Swiss paying agent, the necessity to register the foreign fund with the Swiss Financial Market Supervisory Authority (FINMA) as well as publication and reporting obligations.

1.1. Requirements for foreign funds to be offered to non-qualified investors (“non-QI”)[5]

Before a foreign fund can be offered or advertised in Switzerland to non-QI (retail investors[6]), it must meet the following requirements[7].

The foreign fund must:

  • be subject to public supervision with a focus on investor protection;
  • in terms of organisation, investor rights and investment policy, the foreign fund company / fund management company and the custodian must be subject to regulations which are equivalent to the provisions of the Swiss regulations[8];
  • not provide grounds for confusion or deception with regard to its designation;
  • have appointed a Swiss representative[9] and a Swiss paying agent[10];
  • be approved by FINMA[11] to be offered in Switzerland to non-QI.

The Swiss representative submits the required documents to FINMA for the foreign fund requesting approval. The fund’s legal documents need to be in an official Swiss language (German, French or Italian) or in English, and they must include additional information[12] for Switzerland. Also, the foreign fund needs to appoint an official publication media[13] for the publication of its fund’s legal and marketing documents, legal publications, and NAVs.

Special note for umbrella fund structures: FINMA authorizes umbrella funds on a sub-fund level. Therefore, it is not mandatory to HAVE all sub-funds registered in Switzerland – only those which are foreseen to be offered in Switzerland need to be authorised by FINMA. All share classes of an authorized single fund or sub-fund are automatically authorized as well.

1.2. Requirements for foreign funds to be offered to qualified investors (“QI”)[14]

In general, foreign funds can be offered to QI without fulfilling any additional requirements. There is, however, one exemption: if the foreign fund shall also be available to high-net-worth individuals who have opted-out to be treated as professional clients[15], the fund must appoint a Swiss representative and a Swiss paying agent[16].

2. Requirements for the offering of foreign funds in Switzerland (activity side)

Just because a foreign fund is compliant to be offered in Switzerland does not mean that the foreign fund company or its agents can offer the fund in Switzerland without any additional obligations. In most cases, the person (defined as the “client adviser”) offering fund shares or units in Switzerland also provides a financial service which triggers different requirements for the financial service provider and its employees. Therefore, it is important to know what activities are considered as providing financial services under FinSA.

2.1. Providing financial services in Switzerland

The following five activities are deemed as providing financial services in Switzerland[17]:

  1. acquisition or disposal of financial instruments
  2. receipt and transmission of orders in relation to financial instruments (execution only)
  3. portfolio management (managed accounts and discretionary mandates)
  4. investment advice
  5. granting of loans to finance transactions with financial instruments

The term acquisition of financial instruments is deemed to be any activity addressed directly at a specific end-investor in Switzerland that is aimed at the acquisition of fund shares or units[18]. While giving specific investment advice is of course considered as provision of a financial service, any activity aimed at the purchase of fund shares or units is sufficient to be deemed as providing a financial service. In other words, approaching an end-investor directly with the aim to acquire fund shares or units is considered as providing a financial service under Swiss law. On the contrary, approaching a supervised financial intermediary (e.g. a bank) in Switzerland is not considered as providing a financial service as long as such intermediary does not intend to acquire the fund shares or units in question for its own account (i.e. the intermediary only wants to sell them to its clients). The law’s remit is to protect the end investor and not the prudential supervised financial service provider[19].

2.2. Financial service provider and client adviser

A financial service provider is a person that provides financial services on a commercial basis in Switzerland or for clients in Switzerland[20], while a client adviser is the natural person who performs financial services on behalf of a financial service provider. Therefore, the client adviser is the person who gets in touch with investors on behalf of the financial service provider (or in its own capacity as a financial service provider) and offers or performs a concrete financial service to and for them[21].

2.3. Requirements for the provision of financial services in Switzerland

Foreign financial service providers must comply with the applicable regulations at all times when providing financial services in Switzerland, e.g. assign the clients for whom they provide financial services to a segment (art. 4 FinSA), comply with the code of conduct rules (art. 7 – 19 FinSA), implement the necessary organizational measures (art. 21 – 27 FinSA), duly register as applicable the client advisors in the register of advisers (art. 28 FinSA), and be affiliated to an ombudsman’s office (art. 77 FinSA).

The following explanations will briefly outline the different FinSA requirements that financial service providers and their client advisers need to comply with when providing financial services in Switzerland.

2.3.1. Client segmentation

Financial service providers shall assign the persons for whom they provide financial services to one of the following segments: retail clients, professional clients and institutional clients[22].

Retail clients are clients who are not professional clients.

Professional clients are:

a. financial intermediaries as defined in the Banking Act, the FinIA and the CISA (e.g. banks, portfolio managers, trustees, managers of collective assets, fund management companies, securities firms, Swiss and foreign collective investment schemes, Swiss representatives of foreign collective investment schemes);

b. insurance companies;

c. foreign clients subject to a prudential supervision as the persons listed under “a” and “b” above;

d. central banks;

e. public entities with professional treasury operations;

f. occupational pension schemes and other institutions whose purpose is to serve occupational pensions with professional treasury operations;

g. companies with professional treasury operations;

h. large companies – a large company is a company which exceeds two of the following parameters:

– balance sheet total of CHF 20 million;

– turnover of CHF 40 million;

– equity of CHF 2 million;

i. private investment structures with professional treasury operations created for high-net-worth retail clients.

Institutional clients are professional clients defined above in letters “a” to “d”, as well as national and supranational public entities with professional treasury operations.

2.3.2.Duty to register in the register of advisers (art. 28 FinSA)

Client advisers of Swiss financial service providers which are not subject to supervision in Switzerland may carry out their activity in Switzerland only if they have entered in a register of advisers.

Foreign client advisers of prudentially supervised foreign financial service providers are exempt from the duty to register in the register of advisers if the services they provide in Switzerland are exclusively for professional or institutional clients. Therefore, only foreign advisers who work for a financial service provider that is not prudentially supervised, or foreign advisers who want to offer funds that are approved by FINMA to retail clients need to register in the register of advisors.

Even if an adviser is exempt from registering in the register of advisers, the adviser still needs to comply with all the other FinSA obligations because the FinSA applies to all financial service providers, client advisers and producers and providers of financial instruments[23]. Therefore, client advisers must have sufficient knowledge of the code of conduct set out in FinSA as well as the necessary expertise required to perform their activities[24].

2.3.3. Code of conduct

The following code of conduct provisions do not apply to transactions involving institutional clients, while professional clients may expressly release financial service providers from applying the code of conduct regarding the duty to provide information as well as the duty regarding documentation and rendering of account[25]. Also, it is worth mentioning that for financial service providers that are not supervised in Switzerland, compliance with the code of conduct rules is not ensured by supervision, but by the criminal provisions of FinSA[26]. Duty to provide information (art. 8-9 FinSA)

Financial service providers shall inform their clients of their name and address; their field of activity and supervisory status; the possibility of initiating mediation proceedings before a recognised ombudsman; the general risks associated with financial instruments, the financial service personally recommended and the associated risks and costs; the business affiliations with third parties in connection with the financial service offered, and the market offer taken into account when selecting the financial instruments. Where funds are personally recommended, financial service providers shall also make the key information document and the prospectus available to the retail client. Last but not least, any advertising must be indicated as such[27]. Appropriateness and suitability of financial services (art. 10-14 FinSA)

A financial service provider that provides investment advice for individual transactions without taking into account the entire client portfolio must enquire about its clients’ knowledge and experience and must check whether the fund in question is appropriate for the client before recommending it.

A financial service provider that provides investment advice taking account of the client portfolio or portfolio management must enquire about its clients’ financial situation and investment objectives as well as their knowledge and experience. This knowledge and experience relate to the financial service and not to the individual transactions. A lack of knowledge and experience of a client may be compensated for by providing the client with information.

If the financial service provider is of the opinion that a financial instrument is not appropriate or suitable for its clients, it shall advise them against it before providing it. Documentation and rendering of account (art. 15-16 FinSA)

Financial service providers shall document the financial services agreed with clients and the information collected about them. When providing investment advice, they shall also document clients’ needs and the grounds for each recommendation leading to the acquisition or disposal of a financial instrument. Also, they shall document if they advised the clients against availing of the service or if an exemption from the duty to review occurred. If requested, financial service providers shall provide their clients with a copy of the documentation. Moreover, at the clients’ request, the financial service providers shall render account of the financial services agreed and provided, the composition, valuation and development of the portfolio and the costs associated with the financial services. Transparency and care in client orders (art. 17-19 FinSA)

Financial service providers shall uphold the principles of good faith and equal treatment when handling client orders. They shall ensure in the execution of their clients’ orders that the best possible outcome is achieved in terms of cost, timing and quality (best execution).

Borrowing financial instruments from clients’ portfolios as a counterparty or act as an agent for such transactions is only allowed if the clients have given their prior and express consent to these transactions. Short selling with the financial instruments of retail clients is not permitted.

2.3.4. Organisational measures (art. 21-27 FinSA)

Financial service providers shall ensure that they comply with the duties set out by the FinSA through internal regulations and an appropriate organisation of operations. They need to ensure that their staff possess the necessary skills, knowledge and experience to perform their work and, where necessary, that only employees listed in the register of advisers (Article 29) act as client advisers for them. Furthermore, they shall take appropriate organisational measures to prevent conflicts of interest that could arise through the provision of financial services or any disadvantages for clients as a result of conflicts of interest. If disadvantages for clients cannot be excluded, this possibility must be disclosed to them.

When financial service providers appoint third parties for the provision of their financial services, they have to appoint only persons who possess the necessary skills, knowledge and experience for their work and have the required authorisations and register entries for this activity. Also, they shall carefully instruct and supervise the appointed persons. They remain liable for the completeness and accuracy of the client information and for fulfilling the duties set out in Articles 8 to 16.

Financial service providers may accept compensation (e.g. brokerage fees, commissions, discounts or other financial benefits) from third parties in association with the provision of financial services only if they pass the compensation on to the clients in full or have expressly informed the clients of such compensation in advance and the latter relinquish such compensation.

2.3.5. Duty to affiliate to an ombudsman’s office (art. 77–80 FinSA)

All financial service providers must affiliate to an ombudsman’s office (recognised by the Federal Department of Finance[28]) at the latest on commencing activity [29]. They shall inform their clients in an appropriate form about the name and address of the ombudsman’s office in question as well as about the possibility of mediation proceedings through the ombudsman.

Additional note: There is a new law in the pipeline for Distributed Ledger Technologies (Blockchain)[30] which will amend existing Swiss federal acts including the FinSA. The foreseen amendments in FinSA will limit the ombudsman affiliation requirement to financial service providers that provide their services towards retail clients. This means that financial service providers who provide financial services exclusively towards institutional and professional clients will be exempted from the duty to affiliate to an ombudsman’s office. According to the Swiss federal department of finance, it is expected that the amendments to the different acts will enter into force on 1st August 2021. However, it is planned that the amendments to the FinSA will enter into force at an earlier date[31].


The new implemented Swiss financial market regulations in Switzerland do not bring any additional burdens to foreign investment funds on the product side. On the contrary, some requirements have been dropped under the amended CISA (e.g. the requirement to appoint a Swiss representative and paying agent for foreign funds that are only offered to per se professional clients) and others have been simplified e.g. the foreign fund’s legal documents can now be filed in English with FINMA. However, there are a lot of changes on the activity side. With the abolition of the well-established and easy understandable concept of “distribution” and the introduction of new concepts, like the “offering” of “financial services” and the register of advisers, it can be challenging, especially for foreign actors, to fully understand the new regulations in their entire dimension. It is therefore more important than ever to have a trusted and competent point of contact in Switzerland who can provide comprehensive advice on how to comply with the new regulations in order to offer and advertise investment funds in Switzerland.

About the Author

Patrick Pilastro is working at ACOLIN in the department “Representative Services Switzerland” in Zurich and is responsible of all legal affairs related to foreign investment funds offered in Switzerland. He holds a Master of Law with certificate in business law and has several years of experience in the field of investment funds.

About ACOLIN Fund Services AG (ACOLIN)

Established in 2006 in Zurich, ACOLIN is a success story in European financial services, catering to the specific needs of asset managers in cross-border fund distribution. ACOLIN helps its clients to access new markets and meet regulatory obligations across multiple jurisdictions. The business represents investment funds across various markets, ensuring that all regulatory obligations are rigorously fulfilled, and that fund data and documents are available to investors, intermediaries and to the relevant authorities.

The department “Representative Services Switzerland” assists customers with comprehensive and detailed first-hand information in several languages (English, German, French, Italian and Spanish) to assure a smooth and fast market entry into the Swiss financial market.


[1] However, the FinSO and FinIO provide generous transitional periods of up to three years to comply with certain new obligations.

[2] The overview only focuses on the new regulations and will not explain how it differs from the old regime. Also, it will not explain the different transitional periods.

[3] An “offer” is defined as “any invitation to acquire a financial instrument that contains sufficient information on the terms of the offer and the financial instrument itself” (art. 3g FinSA) and offering in this regard means “drawing attention to a certain financial instrument and to sell it” (art. 3 V b FinSO).

[4] According to art. 127a CISO. “Advertising” is defined as “any communication which is aimed at investors and serves to draw attention to specific financial services or financial instruments.” (art. 95I FinSO)

[5] Non-QI are all investors that are not QI.

[6] Please note that not all retail investors according to FinSA are non-QI according to CISA. The following two exemptions exist:

  1. Retail clients under discretionary mandate or advisory agreement are QI according to art. 10 para. 3ter CISA.
  2. A professional client that made an opting-in to be considered as a retail client (art. 5 para. 5 FinSA) will stay a QI (art. 10 para 3 CISA for all professional clients pursuant art. 4 para. 3-5 FinSA regardless of any opting-in).

[7] See art. 120 I and II CISA and art. 127a CISO.

[8] This is generally the case for UCITS as well as for funds from Hong Kong (approved by the Hong Kong Securities and Futures Commission (SFC) and fall within the categories of funds eligible for offering in Switzerland).

[9] The Swiss representative represents the foreign funds towards Swiss investors and FINMA (art. 124 I CISA).

[10] The Swiss paying agent plays a lesser role. It is foreseen that Swiss investors may request the issue and redemption of the units from the Swiss paying agent (art. 121 II CISA) which means that in the unlikely event that Swiss investors face problems with the issue and redemption of their fund units they can approach the Swiss paying agent which will collect all the requests and send them to the administrator of the foreign fund.

[11] There must also be a cooperation and information exchange agreement between FINMA and the foreign supervisory authorities responsible for the offering of the fund that requests approval.

[12] The country of domicile of the collective investment scheme; the representative; the paying agent; the location where the fund documents (prospectus, KIIDs, articles or regulations as well as the annual and semi-annual report may be obtained for free (art. 133 II CISO).

[13] The media of publication that are publicly accessible and recognized by FINMA.

[14] Qualified investor means an investor in Switzerland pursuant to art. 10 para 3 and para. 3ter CISA.

[15] According to art. 5 I and II FinSA, an opting out is possible for those high-net-worth retail clients and private investment structures created for them who have declared that they wish to be treated as professional clients (opting out), and who fulfil the following criteria:

  • on the basis of training, education and professional experience or on the basis of comparable experience in the financial sector, possess the necessary knowledge to understand the risks associated with the investments and have at their disposal assets of at least CHF 500,000; or
  • have at their disposal assets of at least CHF 2 million.

[16] According to art. 120 IV CISA.

[17] According to art. 3 c FinSA.

[18] See art. 3 II FinSO.

[19] See explanatory report on art. 3 para. 2 FinSO, p. 19:

[20] According to art. 3 d FinSA.

[21] See art. 3 e FinSA.

[22] According to art. 4 FinSA. Only financial service providers that treat all clients as retail clients may refrain from client segmentation. Also, in art. 5 FinSA several opting out and opting in options can be found.

[23] According to art. 2 I FinSA.

[24] According to art. 6 FinSA.

[25] According to art. 20 FinSA.

[26] See art. 89 ff. FinSA.

[27] See also art. 68 FinSA.

[28] A list of recognised ombudsmen can be found under:

[29] According to art. 95 III FinSA, the transitional period to affiliate to an ombudsman’s office ends on the 24th December 2020.

[30] The so-called Federal Act on the Adaptation of Federal Law to Developments in Distributed Ledger Technology (DLT) has already been adopted by the Swiss parliament on 25th September 2020.


The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.