Monthly Archives: May 2019

How to offer to Private Investors

Private clients are:

  • Individuals and HNWI
  • Family offices without a professional treasury management (?)
  • All non-professional clients

To distribute to private clients, you need to:

The last two requirements (FINMA authorization and document publication) will be taken care of by the appointed Swiss representative.

Contact Regiswiss to learn more about how to navigate these regulatory requirements.

How to offer to Professional and Institutional Investors

Institutional clients

Institutional clients belong to the following categories:
 
  • Financial intermediaries as defined in the Swiss Banking Act (BankA), the Collective Investment Schemes Act (CISA) and the Financial Institutions Act (FinIA), including banks, fund management companies, portfolio managers and trustees
  • Swiss regulated insurance institutions
  • Foreign insurance institutions and financial intermediaries that are subject to prudential supervision
  • Central banks
  • National and supra-national public entities with professional treasury management

Institutional clients may opt in in writing to be considered professional clients (thus benefiting from a higher level of protection).

To distribute to institutional clients you need to:

 

Professional clients

Professional clients belong to the following categories:

  • Public entities (non national or supra-national) with professional treasury management (?)
  • Pension funds and companies with a professional treasury management (?)
  • HNWI who opt out of the private clients category
  • Family offices without a professional treasury management (?who opt out of the private clients category

The last two types of professional investors (i.e., HNWI and Family Offices without professional treasury management) are private clients by default, but they may opt out in writing and ask be considered Professional Clients.

To distribute to professional clients you need to:

Swiss Representative and Paying Agent

One of the requirements for distributing a fund to private clients and to some of the professional clients is to appoint a Swiss representative and a Swiss paying agent.

A Swiss representative is a company authorized and regulated by FINMA to perform the due diligence on funds distributed to investors in Switzerland. The representative manages the fund authorization process, ensuring that offering activities comply with Swiss law.

A Swiss paying agent is a Swiss bank enabling Swiss investors to issue or redeem fund shares through a Swiss entity if they choose to do so.

Contact Regiswiss to learn more about the process of appointing a Swiss representative and paying agent.

Swiss investor categories

Swiss investors are classified into three categories: Institutional Clients, Professional clients and Private clients

Requirements vary according to the category. 

Article 4 of FinSA states the obligation for financial service providers to classify their clients according to the categories above. Care must be exercised in correctly assessing the client category, as the possibility to opt-in or opt-out of the different categories exists in many cases. The same article 4 states that the obligation to classify clients is waived if a financial service provider treats all their clients as private clients (i.e., the higher level of protection).

Institutional clients

  • Financial intermediaries as defined in the Swiss Banking Act (BankA), the Collective Investment Schemes Act (CISA) and the Financial Institutions Act (FinIA), including banks, fund management companies, portfolio managers and trustees
  • Swiss regulated insurance institutions
  • Foreign insurance institutions and financial intermediaries that are subject to prudential supervision
  • Central banks
  • National and supra-national public entities with professional treasury management

Institutional clients may opt-in in writing to be considered professional clients (thus benefiting from a higher level of investor protection). 

Distribution to Institutional clients is subject to simplified regulatory requirements.

Professional clients

  • Public entities (non national or supra-national) with professional treasury management
  • Pension funds, family offices and other companies with a professional treasury management
  • Large companies satisfying at least two of the following criteria: (1) a balance sheet of at least CHF 20 million; (2) a turnover of at least CHF 40 million; (3) equity of at least 2 million
  • HNWI who opt out of the private clients category
  • Family offices without a professional treasury management who opt out of the private clients category

Professional clients (non-institutional) can opt-out in writing to be considered institutional clients (thus giving up a certain amount of investor protection).
They may also opt-in in writing to be considered private clients (thus benefiting from the same level of investor protection as private clients).

Distribution to Professional clients is subject to simplified regulatory requirements.

Private clients

An HNWI is defined by FinSA as an individual that fulfills either of the following criteria: (1) sufficient knowledge to understand the risk connected with investments, coming from their personal education and professional experience, and a net worth of at least CHF 500,000; or (2) a net worth of at least CHF 2 million, regardless of knowledge and experience.

Distribution to Private clients is subject to a FINMA authorization and regulatory requirements.

Professional treasury management?

Art. 3 FinSO states that a company or a private investment structure has a professional treasury management if it employs internally (or mandates externally) an experienced person with qualifications in the financial domain to manage their financial resources in the long term.