On July 19, 2016, the European Securities and Markets Authority (“ESMA”) published its revised advice to the European Parliament, the European Council, and the European Commission on the extension of the AIFMD marketing and management passport (“AIFMD Passport”) to certain non-EU alternative investment fund managers (“AIFM”) and alternative investment funds (“AIF”). With respect to Switzerland, ESMA confirmed its earlier positive advice and concluded that that there are no significant obstacles impeding the potential application of the AIFMD Passport to Switzerland. While this positive advice is an important step towards passporting for non-EU AIFM and AIF, it is now up to the European institutions (Parliament, Council, and Commission) to decide, based on ESMA’s advice, whether or not the AIFMD Passport will be extended to third-countries such as Switzerland.

By Patrick Schärli (Reference: CapLaw-2016-32)

In May 2016, the Board of Governors of the U.S. Federal Reserve System proposed new rules that, if adopted, will constitute a significant shift in the terms of financial contracts such as over-the-counter derivatives, repurchase agreement and securities lending transactions. Under the proposed rules, these qualified financial contracts would have to conform with U.S. special resolution regimes. This would require institutional investors, hedge funds and other market participants to relinquish cross-default rights, including in contracts governed by foreign law, entered into with a foreign party, or for which collateral is held outside the U.S.

The International Swaps and Derivatives Association simultaneously released its ISDA Resolution Stay Jurisdictional Modular Protocol which seeks to allow market participants to comply with the proposed rules in the U.S. and similar rules in other jurisdictions.

In this contribution, we provide a brief overview of these proposals which, if adopted, will significantly affect the terms of many financial transactions.

By Thomas Werlen / Jonas Hertner (Reference: CapLaw-2016-33)

On 1 July 2016 revised rules on anti-bribery and corruption law entered into force. The revisions aim at improving the basis to combat corruption in the business sector (so-called private sector bribery). Notably, individuals and companies may be punished cumulatively. Under the new rules, companies and their boards of directors should take appropriate internal measures to prevent private sector bribery.

By Tino Gaberthüel (Reference: CapLaw-2016-24)

On 11 May 2016, the Swiss Federal Council adopted an amendment to the Capital Adequacy Ordinance which sets out the new capital requirements for systemically important banks and introduces a new gone concern requirement for globally systemically important banks in line with G20 standards as promulgated by the Financial Stability Board. It further defines the required features for capital instruments qualifying for the gone concern requirement (so-called “Bail-in Bonds”) and sets out grandfathering provisions for outstanding instruments. The revised Capital Adequacy Ordinance came into effect on 1 July 2016, subject to phase-in and grandfathering provisions as described hereinafter.

By Daniel Hulmann / Stefan Kramer / Benjamin Leisinger (Reference: CapLaw-2016-25)

July 2016 will see the entry into force in member states across the EU of Regulation (EU) No 596/2014, the so-called Market Abuse Regulation or MAR to replace the outgoing Market Abuse Directive. As set out in its recital (5), MAR removes a number of “divergences between national laws”. The EU legislator found it necessary to “adopt a Regulation establishing a more uniform interpretation of the Union market abuse framework, which more clearly defines rules applicable in all Member States.”

By Thomas Werlen / Matthias Wühler (Reference: CapLaw-2016-26)

With effect from 18 March 2016, FINMA introduced a new circular on video and online identification and amended the circular regarding guidelines on asset management. These changes are a first step to develop technology-neutral regulation and to reduce potential hurdles to technological innovation in the Swiss financial sector.

By Katrin Ivell / Benjamin Leisinger (Reference: CapLaw-2016-21)

On 25 November 2015 the Federal Council released the final version of its implementing ordinance (“FMIO”) to the Swiss Financial Markets Infrastructure Act (“FMIA”). The FMIO provides for important clarifications and implementation provisions for, among other things, the new rules on derivatives trading provided for by the FMIA (including clearing, reporting and risk mitigation obligations). The FMIA and the implementing ordinances are expected to become effective on 1 January 2016, subject to a phase-in.

By Stefan Kramer (Reference: CapLaw-2015-57)

On 9 November 2015, the Financial Stability Board finalized its Principles on Loss-absorbing and Recapitalisation Capacity of G-SIBs in Resolution, including the Total Loss-absorbing Capacity (TLAC) Term Sheet. It introduces a new international standard for quantitative and qualitative requirements for external and internal TLAC as well as new disclosure requirements.

By René Bösch / Benjamin Leisinger (Reference: CapLaw-2015-58)

By Jürg Frick / Tobias Aggteleky (Reference: CapLaw-2015-59)

On 1 January 2016, the revised Agreement on the Swiss banks’ code of conduct with regard to the exercise of due diligence (CDB 16) will come into effect. A revision of the former agreement from 2008 has become necessary due to the recently introduced broad revisions to anti-money laundering regulations (see CapLaw-2015-31). The CDB 16 provides new and revised due diligence obligations for Swiss banks with regard to anti-money laundering and counter-terrorist financing. The revisions mainly focus on (1) the introduction of the concept of controlling persons for operating legal entities and partnerships, (2) new or revised template declaration forms as appendices to the CDB 16, and (3) a fundamentally revised framework and formal structure of the CDB 16.

By Robin Hauser (Reference: CapLaw-2015-60)