RESTRICTED
GENERAL AGREEMENT S/IGFS/W/2
30November 1994
ONTRADE INSERVICES
(94-2612)
Interim Group onFinancial Services Original: French
COMMUNICATION FROM SWITZERLAND
Theattached communication iscirculated bythedelegation ofSwitzerland concerning arecent
modification inlegislation intheareaoffinancial services.S/IGFS/W/2
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SWITZERLAND: RECENT CHANGES TOBANKING AND FINANCE LEGISLATION
A. Revision ofthebanking law
1. Therevision ofthebanking lawbrings Swiss banking legislation intolinewithinternational
standards asregards inparticular enhanced supervision andinternational cooperation. Liberalization
measures include inparticular therepeal ofprior notification totheSwiss National Bank forcapital
exports (seepoint 4below).
2. ForeignbankswishingtoestablishacommercialpresenceinSwitzerland(orprovidecross-border
services) mustobtain authorization formtheFederal Banking Commission. Under theamended law,
theFederal Council mayconclude bilateral treaties withother countries toauthorize theestablishment
ofbranch offices, agencies orrepresentative offices andtheprovision ofcross-border services just
onthebasis ofapproval ofthecountry oforigin. Theprerequisite forconcluding anagreement of
thiskindismutual recognition ofequivalent standards ofcontrol andregulation.
3. Intheinterests ofstrengthened international supervision ofbanks, anewparagraph onthe
transmission ofinformation hasbeenadded. Foreign banks areauthorized totransmit totheirparent
company anyinformation required toensure proper surveillance. Theinformation maybeusedonly
forthepurposes ofsupervision, andtheparent company anditssupervisory authority arebound by
banking secrecy. Inaddition, under theapproval procedure thesupervisory authorities ofthecountry
oforigin offoreign banks must guarantee thatproper strengthened supervision willbeexercised.
4. Asregards capital movements, banks nolonger needtoinform theSwiss National Bank in
advance ofcapital outflows inexcess ofSwF10million. Only inexceptional situations (safeguards
clause) maytheGovernment require banks toobtain authorization fromtheSwiss National Bankbefore
concluding suchtransactions (placement orpurchase ofbonds issued byaborrower whose domicile
orprincipal place ofbusiness isabroad, money market book claims (payment rights) ofanykindon
aborrower whose domicile orprincipal place ofbusiness isabroad).
5. These amendments arescheduled toenter intoforce on1January 1995.
B. Lawonthestock exchange andtrade innegotiable instruments
6. Thenewlawonthestock exchange should beadopted byParliament inDecember 1994, and
willreplace theexisting cantonal regulations. Itisaframework lawwhich onlylaysdown principles
while providing forself-regulation bythefinancial sector.
7. Thepurpose ofthelawistoensure transparency andequitable treatment forinvestors aswell
astheefficient functioning ofthemarket.
8. Intheinterests ofgreater transparency, large holdings ofthestock ofcompanies quoted on
thestock exchange willhavetobedeclared. Theobligation toprovide information depends onthe
leveloftheholding inrelation tothethresholds of5,10,20,331/3or662/3percentofvoting rights.
9. Protection ofinvestors willbestrengthened bytheregulation oftakeover bids. Theaimof
theregulation istoensure thatshareholders aretreated fairly.S/IGFS/W/2
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10. Apart from thebanking lawandthelawonmutual funds (collective investments), alegal
framework hasbeenestablished tofacilitate international cooperation among supervisory bodies. In
thecaseofstock markets, thisisparticularly important inorder tocombat insider trading, market
manipulation andmoney laundering.
11. Inprinciple thelawshould enter intoforce inmid-1995.
C. Revision ofthelawoninvestment funds
12. Thislawhasbeendrawn upasaframework lawwhich governs onlythecontractual forms
ofcollective investment. Foreign mutual funds arecovered bythelawwhatever theirstructure, provided
theirpurpose iscollective investment andthatinvestors maywithdraw from thefundatanytime.
13. Thesolestated objective ofthelawistoprotect investors. Whereas thecurrent lawsought
toprotect investors byrestricting therange ofpossible investments, therevised lawallows theuse
ofmodern investment methods andfinancial instruments forhedging andmaximizing profits. Investors
willbeprotected bygreater transparency, i.e.provisions oncompulsory disclosure andpublication
ofinformation. Advertising concerning high-risk investment funds, forexample, mustmention the
factthattheyarehigh-risk. Theseparation between fundmanagement andtheactivities ofdeposit
banks hasbecome mandatory.
14. Theregulation offoreign mutual funds hasbeenincluded intherevised law. Foreign funds
oragents wishing tomarket securities inSwitzerland mayobtain approval iftheregulatory and
supervisory standards intheircountry oforigin areequivalent tothose inSwitzerland.
15. Along withthebanking lawandthestock exchange law,theFederal Government hasbeen
authorized toconclude bilateral treaties onfreeaccess tothemutual fundmarket inSwitzerland and
freeaccess toforeign markets forSwiss mutual funds onthebasisofreciprocal recognition ofequivalent
standards ofsupervision andregulation.
16. Inorder topromote international cooperation inthesupervision ofcapital markets, thelaw
containsprovisionsontheexchangeofinformationbetweentheFederalBankingCommissionandforeign
supervisory authorities.
17. Therevision isscheduled toenter intoforce on1January 1995.
D. Legislation onnon-life insurance
18. Following thederegulation ofdamage insurance which entered intoforce on1October 1993
(eliminating inparticular theobligation toobtain approval forgeneral insurance conditions andrates),
theGovernment recently approved draftlegislation tobesenttoParliament which provides forsimilar
deregulation ofcivilliability insurance formotor vehicles.