Lifting of the “moratorium”

This announcement marks the end of the "moratorium" that has been in place for several years and means that Swiss asset managers offering investment advice and asset management services and wishing to operate on a cross border basis in the USA can once again register with the SEC as Registered Investment Advisers (RIAs). FINMA and the SEC have agreed on the modalities for SEC inspections of Swiss institutions that are registered as RIAs and supervised by FINMA. Direct transmission pursuant to Art. 42c of the Financial Market Supervision Act (FINMASA) and on-site inspections pursuant to Art. 43 FINMASA can thus be carried out in accordance with the Swiss and US legal frameworks.

Requirements

In order to register as an RIA and provide investment advisory and asset management services in the US, the registration process with the SEC must be completed. In addition, FINMA must grant the appropriate authorization for the relevant activities.

...in the US...

For registration in the US, Swiss asset managers must carefully consider the local US requirements.  To register, the individuals providing the services must also demonstrate that they have the appropriate qualifications in accordance with US law. The institution's organization must then meet US requirements, particularly with regard to US compliance and applicable regulations

The application is submitted in the US via an electronic platform. Once the forms have been submitted, the SEC reviews the registration and may request changes from the institution. Only after the registration has been approved may the Swiss institution offer investment advice and asset management in the US. After registration, annual updates and filings must be submitted to the SEC; the SEC may also request data during the year and carry out on-site inspections in coordination with FINMA.

...and in Switzerland

For all new registrations in the US, existing Swiss asset managers must obtain an authorization from FINMA in Switzerland in order to amend the geographical scope of activities in the internal regulations. The institutions must demonstrate that their organization complies with both Swiss and US requirements. This places a greater emphasis on compliance and risk management.

As before, the application in Switzerland will be submitted via FINMA's EHP platform. The activities cannot be started before being authorized by FINMA for such activity.

New opportunities

With the SEC to resume processing of registration applications from Swiss based asset managers, the Swiss industry will once again have access to a very dynamic market. Particular attention is required with regard to US compliance, and local expert advice should be sought to ensure that the relevant US legal and regulatory requirements are met.

With trusted partners in the US and our in-depth experience in global asset management, Schellenberg Wittmer can guide Swiss institutions through the process of obtaining SEC registration and FINMA authorization.

Authors

Caroline Clemetson, Dusan Ivanovic